Correlation Between Coterra Energy and Evolution Petroleum
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Evolution Petroleum 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 Evolution Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coterra Energy and Evolution Petroleum, you can compare the effects of market volatilities on Coterra Energy and Evolution Petroleum 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 Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Evolution Petroleum.
Diversification Opportunities for Coterra Energy and Evolution Petroleum
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coterra and Evolution is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum 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 Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of Coterra Energy i.e., Coterra Energy and Evolution Petroleum go up and down completely randomly.
Pair Corralation between Coterra Energy and Evolution Petroleum
Given the investment horizon of 90 days Coterra Energy is expected to generate 1.08 times less return on investment than Evolution Petroleum. In addition to that, Coterra Energy is 1.02 times more volatile than Evolution Petroleum. It trades about 0.28 of its total potential returns per unit of risk. Evolution Petroleum is currently generating about 0.31 per unit of volatility. If you would invest 515.00 in Evolution Petroleum on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Evolution Petroleum or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Evolution Petroleum
Performance |
| Timeline |
| Coterra Energy |
| Evolution Petroleum |
Coterra Energy and Evolution Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Evolution Petroleum
The main advantage of trading using opposite Coterra Energy and Evolution Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Evolution Petroleum 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 Evolution Petroleum will offset losses from the drop in Evolution Petroleum's long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
| Evolution Petroleum vs. GeoPark | Evolution Petroleum vs. Granite Ridge Resources | Evolution Petroleum vs. PHX Minerals | Evolution Petroleum vs. California Resources Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |