Correlation Between Falcon Oil and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Falcon Oil 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 Falcon Oil and Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and Civitas Resources, you can compare the effects of market volatilities on Falcon Oil 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 Falcon Oil with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and Civitas Resources.
Diversification Opportunities for Falcon Oil and Civitas Resources
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Civitas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and Falcon Oil 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 Falcon Oil Gas 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 Falcon Oil i.e., Falcon Oil and Civitas Resources go up and down completely randomly.
Pair Corralation between Falcon Oil and Civitas Resources
Assuming the 90 days horizon Falcon Oil Gas is expected to generate 5.52 times more return on investment than Civitas Resources. However, Falcon Oil is 5.52 times more volatile than Civitas Resources. It trades about 0.35 of its potential returns per unit of risk. Civitas Resources is currently generating about 0.55 per unit of risk. If you would invest 5.08 in Falcon Oil Gas on October 23, 2024 and sell it today you would earn a total of 3.92 from holding Falcon Oil Gas or generate 77.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Falcon Oil Gas vs. Civitas Resources
Performance |
| Timeline |
| Falcon Oil Gas |
| Civitas Resources |
Falcon Oil and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and Civitas Resources
The main advantage of trading using opposite Falcon Oil and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil 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.| Falcon Oil vs. Gulf Keystone Petroleum | Falcon Oil vs. Maverick Energy Group | Falcon Oil vs. North European Oil | Falcon Oil vs. SandRidge 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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