Correlation Between Coterra Energy and Homeland Resources
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Homeland 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 Homeland 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 Homeland Resources, you can compare the effects of market volatilities on Coterra Energy and Homeland 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 Homeland Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Homeland Resources.
Diversification Opportunities for Coterra Energy and Homeland Resources
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coterra and Homeland is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Homeland Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeland 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 Homeland Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeland Resources has no effect on the direction of Coterra Energy i.e., Coterra Energy and Homeland Resources go up and down completely randomly.
Pair Corralation between Coterra Energy and Homeland Resources
Given the investment horizon of 90 days Coterra Energy is expected to under-perform the Homeland Resources. But the stock apears to be less risky and, when comparing its historical volatility, Coterra Energy is 19.35 times less risky than Homeland Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Homeland Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.08 in Homeland Resources on September 12, 2024 and sell it today you would lose (0.06) from holding Homeland Resources or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.15% |
| Values | Daily Returns |
Coterra Energy vs. Homeland Resources
Performance |
| Timeline |
| Coterra Energy |
| Homeland Resources |
Coterra Energy and Homeland Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Homeland Resources
The main advantage of trading using opposite Coterra Energy and Homeland Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Homeland 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 Homeland Resources will offset losses from the drop in Homeland Resources' long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
| Homeland Resources vs. Permian Resources | Homeland Resources vs. Devon Energy | Homeland Resources vs. EOG Resources | Homeland 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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