Correlation Between Coterra Energy and Golar LNG
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Golar LNG 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 Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coterra Energy and Golar LNG Limited, you can compare the effects of market volatilities on Coterra Energy and Golar LNG 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 Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Golar LNG.
Diversification Opportunities for Coterra Energy and Golar LNG
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coterra and Golar is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited 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 Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of Coterra Energy i.e., Coterra Energy and Golar LNG go up and down completely randomly.
Pair Corralation between Coterra Energy and Golar LNG
Given the investment horizon of 90 days Coterra Energy is expected to generate 0.73 times more return on investment than Golar LNG. However, Coterra Energy is 1.37 times less risky than Golar LNG. It trades about 0.15 of its potential returns per unit of risk. Golar LNG Limited is currently generating about 0.1 per unit of risk. If you would invest 2,396 in Coterra Energy on August 23, 2024 and sell it today you would earn a total of 348.00 from holding Coterra Energy or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Golar LNG Limited
Performance |
| Timeline |
| Coterra Energy |
| Golar LNG Limited |
Coterra Energy and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Golar LNG
The main advantage of trading using opposite Coterra Energy and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Golar LNG 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 Golar LNG will offset losses from the drop in Golar LNG'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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