Correlation Between Coterra Energy and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Southern Cross 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 Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coterra Energy and Southern Cross Media, you can compare the effects of market volatilities on Coterra Energy and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Southern Cross.
Diversification Opportunities for Coterra Energy and Southern Cross
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coterra and Southern is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of Coterra Energy i.e., Coterra Energy and Southern Cross go up and down completely randomly.
Pair Corralation between Coterra Energy and Southern Cross
Given the investment horizon of 90 days Coterra Energy is expected to generate 0.33 times more return on investment than Southern Cross. However, Coterra Energy is 3.06 times less risky than Southern Cross. It trades about 0.17 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.11 per unit of risk. If you would invest 2,375 in Coterra Energy on August 30, 2024 and sell it today you would earn a total of 293.00 from holding Coterra Energy or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Southern Cross Media
Performance |
| Timeline |
| Coterra Energy |
| Southern Cross Media |
Coterra Energy and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Southern Cross
The main advantage of trading using opposite Coterra Energy and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. ConocoPhillips | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. Occidental Petroleum |
| Southern Cross vs. Permian Resources | Southern Cross vs. Devon Energy | Southern Cross vs. EOG Resources | Southern Cross 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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