Correlation Between Hess and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Hess 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 Hess and Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Corporation and Civitas Resources, you can compare the effects of market volatilities on Hess 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 Hess with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess and Civitas Resources.
Diversification Opportunities for Hess and Civitas Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hess and Civitas is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and Hess 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 Hess Corporation 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 Hess i.e., Hess and Civitas Resources go up and down completely randomly.
Pair Corralation between Hess and Civitas Resources
Considering the 90-day investment horizon Hess Corporation is expected to generate 0.77 times more return on investment than Civitas Resources. However, Hess Corporation is 1.29 times less risky than Civitas Resources. It trades about 0.02 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.02 per unit of risk. If you would invest 13,236 in Hess Corporation on August 28, 2024 and sell it today you would earn a total of 1,302 from holding Hess Corporation or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hess Corp. vs. Civitas Resources
Performance |
| Timeline |
| Hess |
| Civitas Resources |
Hess and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess and Civitas Resources
The main advantage of trading using opposite Hess and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess 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.The idea behind Hess Corporation and Civitas Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Civitas Resources vs. ConocoPhillips | Civitas Resources vs. Occidental Petroleum | Civitas Resources vs. EOG Resources | Civitas Resources vs. Coterra Energy |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |