Correlation Between Diamondback Energy and Amplify Energy
Can any of the company-specific risk be diversified away by investing in both Diamondback Energy and Amplify 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 Diamondback Energy and Amplify Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamondback Energy and Amplify Energy Corp, you can compare the effects of market volatilities on Diamondback Energy and Amplify 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 Diamondback Energy with a short position of Amplify Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondback Energy and Amplify Energy.
Diversification Opportunities for Diamondback Energy and Amplify Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamondback and Amplify is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Diamondback Energy and Amplify Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Energy Corp and Diamondback 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 Diamondback Energy are associated (or correlated) with Amplify Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Energy Corp has no effect on the direction of Diamondback Energy i.e., Diamondback Energy and Amplify Energy go up and down completely randomly.
Pair Corralation between Diamondback Energy and Amplify Energy
Given the investment horizon of 90 days Diamondback Energy is expected to generate 1.54 times less return on investment than Amplify Energy. But when comparing it to its historical volatility, Diamondback Energy is 1.37 times less risky than Amplify Energy. It trades about 0.03 of its potential returns per unit of risk. Amplify Energy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 662.00 in Amplify Energy Corp on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Amplify Energy Corp or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamondback Energy vs. Amplify Energy Corp
Performance |
| Timeline |
| Diamondback Energy |
| Amplify Energy Corp |
Diamondback Energy and Amplify Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondback Energy and Amplify Energy
The main advantage of trading using opposite Diamondback Energy and Amplify Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondback Energy position performs unexpectedly, Amplify 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 Amplify Energy will offset losses from the drop in Amplify Energy's long position.| Diamondback Energy vs. Devon Energy | Diamondback Energy vs. Coterra Energy | Diamondback Energy vs. EOG Resources | Diamondback Energy vs. ConocoPhillips |
| Amplify Energy vs. Vital Energy | Amplify Energy vs. Comstock Resources | Amplify Energy vs. Magnolia Oil Gas | Amplify Energy vs. Obsidian 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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