Correlation Between Journey Energy and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Journey Energy and Baytex 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 Journey Energy and Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Journey Energy and Baytex Energy Corp, you can compare the effects of market volatilities on Journey Energy and Baytex 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 Journey Energy with a short position of Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Journey Energy and Baytex Energy.
Diversification Opportunities for Journey Energy and Baytex Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Journey and Baytex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Journey Energy and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp and Journey 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 Journey Energy are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Journey Energy i.e., Journey Energy and Baytex Energy go up and down completely randomly.
Pair Corralation between Journey Energy and Baytex Energy
Assuming the 90 days trading horizon Journey Energy is expected to generate 1.4 times more return on investment than Baytex Energy. However, Journey Energy is 1.4 times more volatile than Baytex Energy Corp. It trades about -0.13 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.46 per unit of risk. If you would invest 206.00 in Journey Energy on September 18, 2024 and sell it today you would lose (18.00) from holding Journey Energy or give up 8.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Journey Energy vs. Baytex Energy Corp
Performance |
| Timeline |
| Journey Energy |
| Baytex Energy Corp |
Journey Energy and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Journey Energy and Baytex Energy
The main advantage of trading using opposite Journey Energy and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Journey Energy position performs unexpectedly, Baytex 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.| Journey Energy vs. Gear Energy | Journey Energy vs. InPlay Oil Corp | Journey Energy vs. Headwater Exploration | Journey Energy vs. Cardinal Energy |
| Baytex Energy vs. MEG Energy Corp | Baytex Energy vs. Whitecap Resources | Baytex Energy vs. Athabasca Oil Corp | Baytex Energy vs. Cenovus 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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