Correlation Between Denbury Resources and Crescent Energy
Can any of the company-specific risk be diversified away by investing in both Denbury Resources and Crescent 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 Denbury Resources and Crescent Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Denbury Resources and Crescent Energy Co, you can compare the effects of market volatilities on Denbury Resources and Crescent 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 Denbury Resources with a short position of Crescent Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Denbury Resources and Crescent Energy.
Diversification Opportunities for Denbury Resources and Crescent Energy
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Denbury and Crescent is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Denbury Resources and Crescent Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Energy and Denbury Resources 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 Denbury Resources are associated (or correlated) with Crescent Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Energy has no effect on the direction of Denbury Resources i.e., Denbury Resources and Crescent Energy go up and down completely randomly.
Pair Corralation between Denbury Resources and Crescent Energy
Considering the 90-day investment horizon Denbury Resources is expected to generate 1.95 times less return on investment than Crescent Energy. But when comparing it to its historical volatility, Denbury Resources is 1.37 times less risky than Crescent Energy. It trades about 0.02 of its potential returns per unit of risk. Crescent Energy Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Crescent Energy Co on August 29, 2024 and sell it today you would earn a total of 340.00 from holding Crescent Energy Co or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.52% |
| Values | Daily Returns |
Denbury Resources vs. Crescent Energy Co
Performance |
| Timeline |
| Denbury Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Crescent Energy |
Denbury Resources and Crescent Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Denbury Resources and Crescent Energy
The main advantage of trading using opposite Denbury Resources and Crescent Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Denbury Resources position performs unexpectedly, Crescent 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 Crescent Energy will offset losses from the drop in Crescent Energy's long position.| Denbury Resources vs. Matador Resources | Denbury Resources vs. Murphy Oil | Denbury Resources vs. Civitas Resources | Denbury Resources vs. Chord Energy Corp |
| Crescent Energy vs. Vital Energy | Crescent Energy vs. Permian Resources | Crescent Energy vs. Magnolia Oil Gas | Crescent Energy vs. Ring 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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