Correlation Between Coterra Energy and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Frontera 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 Frontera 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 Frontera Energy Corp, you can compare the effects of market volatilities on Coterra Energy and Frontera 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 Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Frontera Energy.
Diversification Opportunities for Coterra Energy and Frontera Energy
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coterra and Frontera is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Frontera Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontera Energy Corp 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 Frontera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontera Energy Corp has no effect on the direction of Coterra Energy i.e., Coterra Energy and Frontera Energy go up and down completely randomly.
Pair Corralation between Coterra Energy and Frontera Energy
Given the investment horizon of 90 days Coterra Energy is expected to generate 1.22 times more return on investment than Frontera Energy. However, Coterra Energy is 1.22 times more volatile than Frontera Energy Corp. It trades about 0.38 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about 0.06 per unit of risk. If you would invest 2,365 in Coterra Energy on August 26, 2024 and sell it today you would earn a total of 398.00 from holding Coterra Energy or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Frontera Energy Corp
Performance |
| Timeline |
| Coterra Energy |
| Frontera Energy Corp |
Coterra Energy and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Frontera Energy
The main advantage of trading using opposite Coterra Energy and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Frontera 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 Frontera Energy will offset losses from the drop in Frontera 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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