Correlation Between Vaalco Energy and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Vaalco Energy and Civitas 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 Vaalco Energy and Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vaalco Energy and Civitas Resources, you can compare the effects of market volatilities on Vaalco Energy and Civitas 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 Vaalco Energy with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaalco Energy and Civitas Resources.
Diversification Opportunities for Vaalco Energy and Civitas Resources
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vaalco and Civitas is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and Vaalco 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 Vaalco Energy are associated (or correlated) with Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Vaalco Energy i.e., Vaalco Energy and Civitas Resources go up and down completely randomly.
Pair Corralation between Vaalco Energy and Civitas Resources
Considering the 90-day investment horizon Vaalco Energy is expected to generate 1.5 times more return on investment than Civitas Resources. However, Vaalco Energy is 1.5 times more volatile than Civitas Resources. It trades about 0.04 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.04 per unit of risk. If you would invest 436.00 in Vaalco Energy on August 24, 2024 and sell it today you would earn a total of 105.00 from holding Vaalco Energy or generate 24.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vaalco Energy vs. Civitas Resources
Performance |
| Timeline |
| Vaalco Energy |
| Civitas Resources |
Vaalco Energy and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vaalco Energy and Civitas Resources
The main advantage of trading using opposite Vaalco Energy and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaalco Energy position performs unexpectedly, Civitas 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.| Vaalco Energy vs. Epsilon Energy | Vaalco Energy vs. PHX Minerals | Vaalco Energy vs. Northern Oil Gas | Vaalco Energy vs. Gran Tierra Energy |
| Civitas Resources vs. Magnolia Oil Gas | Civitas Resources vs. SM Energy Co | Civitas Resources vs. Range Resources Corp | Civitas Resources vs. Matador Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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