Correlation Between Diamondback Energy and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Diamondback 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 Diamondback 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 Diamondback Energy and Civitas Resources, you can compare the effects of market volatilities on Diamondback 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 Diamondback Energy with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondback Energy and Civitas Resources.
Diversification Opportunities for Diamondback Energy and Civitas Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamondback and Civitas is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Diamondback Energy and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 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 Diamondback Energy i.e., Diamondback Energy and Civitas Resources go up and down completely randomly.
Pair Corralation between Diamondback Energy and Civitas Resources
Given the investment horizon of 90 days Diamondback Energy is expected to generate 3.52 times less return on investment than Civitas Resources. But when comparing it to its historical volatility, Diamondback Energy is 1.08 times less risky than Civitas Resources. It trades about 0.04 of its potential returns per unit of risk. Civitas Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,926 in Civitas Resources on August 28, 2024 and sell it today you would earn a total of 266.00 from holding Civitas Resources or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamondback Energy vs. Civitas Resources
Performance |
| Timeline |
| Diamondback Energy |
| Civitas Resources |
Diamondback Energy and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondback Energy and Civitas Resources
The main advantage of trading using opposite Diamondback Energy and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondback 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.| Diamondback Energy vs. Devon Energy | Diamondback Energy vs. Coterra Energy | Diamondback Energy vs. EOG Resources | Diamondback Energy vs. ConocoPhillips |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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