Correlation Between Foothills Exploration and Permian Resources
Can any of the company-specific risk be diversified away by investing in both Foothills Exploration and Permian 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 Foothills Exploration and Permian Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foothills Exploration and Permian Resources, you can compare the effects of market volatilities on Foothills Exploration and Permian 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 Foothills Exploration with a short position of Permian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foothills Exploration and Permian Resources.
Diversification Opportunities for Foothills Exploration and Permian Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Foothills and Permian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Foothills Exploration and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources and Foothills Exploration 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 Foothills Exploration are associated (or correlated) with Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Foothills Exploration i.e., Foothills Exploration and Permian Resources go up and down completely randomly.
Pair Corralation between Foothills Exploration and Permian Resources
Given the investment horizon of 90 days Foothills Exploration is expected to generate 15.48 times more return on investment than Permian Resources. However, Foothills Exploration is 15.48 times more volatile than Permian Resources. It trades about 0.12 of its potential returns per unit of risk. Permian Resources is currently generating about 0.07 per unit of risk. If you would invest 0.02 in Foothills Exploration on August 31, 2024 and sell it today you would lose (0.01) from holding Foothills Exploration or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Foothills Exploration vs. Permian Resources
Performance |
| Timeline |
| Foothills Exploration |
| Permian Resources |
Foothills Exploration and Permian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foothills Exploration and Permian Resources
The main advantage of trading using opposite Foothills Exploration and Permian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foothills Exploration position performs unexpectedly, Permian 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 Permian Resources will offset losses from the drop in Permian Resources' long position.| Foothills Exploration vs. Permian Resources | Foothills Exploration vs. Devon Energy | Foothills Exploration vs. EOG Resources | Foothills Exploration vs. Coterra Energy |
| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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