Correlation Between Coterra Energy and Barrel Energy
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Barrel Energy 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 Coterra Energy and Barrel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coterra Energy and Barrel Energy, you can compare the effects of market volatilities on Coterra Energy and Barrel Energy 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 Coterra Energy with a short position of Barrel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Barrel Energy.
Diversification Opportunities for Coterra Energy and Barrel Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coterra and Barrel is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Barrel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrel Energy and Coterra 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 Coterra Energy are associated (or correlated) with Barrel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrel Energy has no effect on the direction of Coterra Energy i.e., Coterra Energy and Barrel Energy go up and down completely randomly.
Pair Corralation between Coterra Energy and Barrel Energy
Given the investment horizon of 90 days Coterra Energy is expected to generate 0.14 times more return on investment than Barrel Energy. However, Coterra Energy is 7.04 times less risky than Barrel Energy. It trades about 0.25 of its potential returns per unit of risk. Barrel Energy is currently generating about 0.03 per unit of risk. If you would invest 2,393 in Coterra Energy on August 31, 2024 and sell it today you would earn a total of 275.00 from holding Coterra Energy or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Barrel Energy
Performance |
| Timeline |
| Coterra Energy |
| Barrel Energy |
Coterra Energy and Barrel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Barrel Energy
The main advantage of trading using opposite Coterra Energy and Barrel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Barrel Energy 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 Barrel Energy will offset losses from the drop in Barrel Energy's long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
| Barrel Energy vs. Permian Resources | Barrel Energy vs. Devon Energy | Barrel Energy vs. EOG Resources | Barrel Energy 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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