Correlation Between Capricorn Energy and Tullow Oil
Can any of the company-specific risk be diversified away by investing in both Capricorn Energy and Tullow Oil at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Capricorn Energy and Tullow Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricorn Energy PLC and Tullow Oil PLC, you can compare the effects of market volatilities on Capricorn Energy and Tullow Oil and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Capricorn Energy with a short position of Tullow Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and Tullow Oil.
Diversification Opportunities for Capricorn Energy and Tullow Oil
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capricorn and Tullow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy PLC and Tullow Oil PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil PLC and Capricorn Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Capricorn Energy PLC are associated (or correlated) with Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil PLC has no effect on the direction of Capricorn Energy i.e., Capricorn Energy and Tullow Oil go up and down completely randomly.
Pair Corralation between Capricorn Energy and Tullow Oil
Assuming the 90 days horizon Capricorn Energy PLC is expected to generate 0.59 times more return on investment than Tullow Oil. However, Capricorn Energy PLC is 1.69 times less risky than Tullow Oil. It trades about 0.07 of its potential returns per unit of risk. Tullow Oil PLC is currently generating about -0.06 per unit of risk. If you would invest 553.00 in Capricorn Energy PLC on September 1, 2024 and sell it today you would earn a total of 17.00 from holding Capricorn Energy PLC or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capricorn Energy PLC vs. Tullow Oil PLC
Performance |
| Timeline |
| Capricorn Energy PLC |
| Tullow Oil PLC |
Capricorn Energy and Tullow Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Energy and Tullow Oil
The main advantage of trading using opposite Capricorn Energy and Tullow Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn Energy position performs unexpectedly, Tullow Oil can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tullow Oil will offset losses from the drop in Tullow Oil's long position.| Capricorn Energy vs. San Leon Energy | Capricorn Energy vs. Tullow Oil PLC | Capricorn Energy vs. Dno ASA | Capricorn Energy vs. PetroShale |
| Tullow Oil vs. Permian Resources | Tullow Oil vs. Devon Energy | Tullow Oil vs. EOG Resources | Tullow Oil vs. Coterra Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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