Correlation Between Diamondback Energy and Crescent Point
Can any of the company-specific risk be diversified away by investing in both Diamondback Energy and Crescent Point 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 Crescent Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamondback Energy and Crescent Point Energy, you can compare the effects of market volatilities on Diamondback Energy and Crescent Point 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 Crescent Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondback Energy and Crescent Point.
Diversification Opportunities for Diamondback Energy and Crescent Point
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Diamondback and Crescent is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Diamondback Energy and Crescent Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Point Energy 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 Crescent Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Point Energy has no effect on the direction of Diamondback Energy i.e., Diamondback Energy and Crescent Point go up and down completely randomly.
Pair Corralation between Diamondback Energy and Crescent Point
Given the investment horizon of 90 days Diamondback Energy is expected to generate 2.82 times less return on investment than Crescent Point. But when comparing it to its historical volatility, Diamondback Energy is 1.05 times less risky than Crescent Point. It trades about 0.03 of its potential returns per unit of risk. Crescent Point Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 674.00 in Crescent Point Energy on September 14, 2024 and sell it today you would earn a total of 125.00 from holding Crescent Point Energy or generate 18.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 57.83% |
| Values | Daily Returns |
Diamondback Energy vs. Crescent Point Energy
Performance |
| Timeline |
| Diamondback Energy |
| Crescent Point Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Diamondback Energy and Crescent Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondback Energy and Crescent Point
The main advantage of trading using opposite Diamondback Energy and Crescent Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondback Energy position performs unexpectedly, Crescent Point 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 Point will offset losses from the drop in Crescent Point's long position.| Diamondback Energy vs. Evolution Petroleum | Diamondback Energy vs. Ring Energy | Diamondback Energy vs. Gran Tierra Energy | Diamondback Energy vs. Permian Resources |
| Crescent Point vs. Vermilion Energy | Crescent Point vs. Canadian Natural Resources | Crescent Point vs. Baytex Energy Corp | Crescent Point vs. Ovintiv |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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