Correlation Between FLEX LNG and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and Coterra 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 FLEX LNG and Coterra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Coterra Energy, you can compare the effects of market volatilities on FLEX LNG and Coterra 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 FLEX LNG with a short position of Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Coterra Energy.
Diversification Opportunities for FLEX LNG and Coterra Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between FLEX and Coterra is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy and FLEX LNG 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 FLEX LNG are associated (or correlated) with Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of FLEX LNG i.e., FLEX LNG and Coterra Energy go up and down completely randomly.
Pair Corralation between FLEX LNG and Coterra Energy
Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Coterra Energy. But the stock apears to be less risky and, when comparing its historical volatility, FLEX LNG is 1.06 times less risky than Coterra Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Coterra Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,521 in Coterra Energy on August 23, 2024 and sell it today you would earn a total of 223.00 from holding Coterra Energy or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. Coterra Energy
Performance |
| Timeline |
| FLEX LNG |
| Coterra Energy |
FLEX LNG and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and Coterra Energy
The main advantage of trading using opposite FLEX LNG and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, Coterra 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 Coterra Energy will offset losses from the drop in Coterra Energy's long position.| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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