Correlation Between Coterra Energy and Comstock Resources
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Comstock Resources 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 Comstock Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coterra Energy and Comstock Resources, you can compare the effects of market volatilities on Coterra Energy and Comstock Resources 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 Comstock Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Comstock Resources.
Diversification Opportunities for Coterra Energy and Comstock Resources
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Coterra and Comstock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Comstock Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Resources 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 Comstock Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Resources has no effect on the direction of Coterra Energy i.e., Coterra Energy and Comstock Resources go up and down completely randomly.
Pair Corralation between Coterra Energy and Comstock Resources
Given the investment horizon of 90 days Coterra Energy is expected to generate 1.99 times less return on investment than Comstock Resources. But when comparing it to its historical volatility, Coterra Energy is 1.92 times less risky than Comstock Resources. It trades about 0.31 of its potential returns per unit of risk. Comstock Resources is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,194 in Comstock Resources on August 28, 2024 and sell it today you would earn a total of 357.00 from holding Comstock Resources or generate 29.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Comstock Resources
Performance |
| Timeline |
| Coterra Energy |
| Comstock Resources |
Coterra Energy and Comstock Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Comstock Resources
The main advantage of trading using opposite Coterra Energy and Comstock Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Comstock Resources 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 Comstock Resources will offset losses from the drop in Comstock Resources' long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
| Comstock Resources vs. ConocoPhillips | Comstock Resources vs. Occidental Petroleum | Comstock Resources vs. EOG Resources | Comstock Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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