Correlation Between Coterra Energy and Pharos Energy
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Pharos 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 Pharos 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 Pharos Energy plc, you can compare the effects of market volatilities on Coterra Energy and Pharos 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 Pharos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Pharos Energy.
Diversification Opportunities for Coterra Energy and Pharos Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coterra and Pharos is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Pharos Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharos 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 Pharos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharos Energy plc has no effect on the direction of Coterra Energy i.e., Coterra Energy and Pharos Energy go up and down completely randomly.
Pair Corralation between Coterra Energy and Pharos Energy
Given the investment horizon of 90 days Coterra Energy is expected to generate 0.49 times more return on investment than Pharos Energy. However, Coterra Energy is 2.03 times less risky than Pharos Energy. It trades about 0.28 of its potential returns per unit of risk. Pharos Energy plc is currently generating about -0.22 per unit of risk. If you would invest 2,372 in Coterra Energy on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Coterra Energy or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Pharos Energy plc
Performance |
| Timeline |
| Coterra Energy |
| Pharos Energy plc |
Coterra Energy and Pharos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Pharos Energy
The main advantage of trading using opposite Coterra Energy and Pharos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Pharos 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 Pharos Energy will offset losses from the drop in Pharos 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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