Correlation Between Coterra Energy and Capricorn Energy
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Capricorn 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 Capricorn 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 Capricorn Energy PLC, you can compare the effects of market volatilities on Coterra Energy and Capricorn 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 Capricorn Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Capricorn Energy.
Diversification Opportunities for Coterra Energy and Capricorn Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coterra and Capricorn is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Capricorn Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Energy PLC 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 Capricorn Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Energy PLC has no effect on the direction of Coterra Energy i.e., Coterra Energy and Capricorn Energy go up and down completely randomly.
Pair Corralation between Coterra Energy and Capricorn Energy
Given the investment horizon of 90 days Coterra Energy is expected to generate 0.83 times more return on investment than Capricorn Energy. However, Coterra Energy is 1.2 times less risky than Capricorn Energy. It trades about 0.27 of its potential returns per unit of risk. Capricorn Energy PLC is currently generating about 0.07 per unit of risk. If you would invest 2,361 in Coterra Energy on August 30, 2024 and sell it today you would earn a total of 307.00 from holding Coterra Energy or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coterra Energy vs. Capricorn Energy PLC
Performance |
| Timeline |
| Coterra Energy |
| Capricorn Energy PLC |
Coterra Energy and Capricorn Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Capricorn Energy
The main advantage of trading using opposite Coterra Energy and Capricorn Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Capricorn 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 Capricorn Energy will offset losses from the drop in Capricorn Energy's long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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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 Stocks Directory module to find actively traded stocks across global markets.
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