Correlation Between Gear Energy and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Gear 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 Gear 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 Gear Energy and Civitas Resources, you can compare the effects of market volatilities on Gear 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 Gear Energy with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Civitas Resources.
Diversification Opportunities for Gear Energy and Civitas Resources
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gear and Civitas is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and Gear 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 Gear 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 Gear Energy i.e., Gear Energy and Civitas Resources go up and down completely randomly.
Pair Corralation between Gear Energy and Civitas Resources
Assuming the 90 days horizon Gear Energy is expected to generate 0.17 times more return on investment than Civitas Resources. However, Gear Energy is 5.87 times less risky than Civitas Resources. It trades about -0.23 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.05 per unit of risk. If you would invest 42.00 in Gear Energy on August 25, 2024 and sell it today you would lose (4.00) from holding Gear Energy or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gear Energy vs. Civitas Resources
Performance |
| Timeline |
| Gear Energy |
| Civitas Resources |
Gear Energy and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Civitas Resources
The main advantage of trading using opposite Gear Energy and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear 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.| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
| Civitas Resources vs. Legacy Education | Civitas Resources vs. NVIDIA | Civitas Resources vs. Apple Inc | Civitas Resources vs. Microsoft |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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