Correlation Between Karoon Energy and Permian Resources
Can any of the company-specific risk be diversified away by investing in both Karoon Energy 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 Karoon Energy and Permian Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karoon Energy and Permian Resources, you can compare the effects of market volatilities on Karoon Energy 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 Karoon Energy with a short position of Permian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karoon Energy and Permian Resources.
Diversification Opportunities for Karoon Energy and Permian Resources
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Karoon and Permian is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Karoon Energy and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources and Karoon 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 Karoon Energy 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 Karoon Energy i.e., Karoon Energy and Permian Resources go up and down completely randomly.
Pair Corralation between Karoon Energy and Permian Resources
Assuming the 90 days horizon Karoon Energy is expected to under-perform the Permian Resources. In addition to that, Karoon Energy is 1.62 times more volatile than Permian Resources. It trades about -0.02 of its total potential returns per unit of risk. Permian Resources is currently generating about 0.02 per unit of volatility. If you would invest 1,497 in Permian Resources on September 3, 2024 and sell it today you would earn a total of 31.00 from holding Permian Resources or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Karoon Energy vs. Permian Resources
Performance |
| Timeline |
| Karoon Energy |
| Permian Resources |
Karoon Energy and Permian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karoon Energy and Permian Resources
The main advantage of trading using opposite Karoon Energy and Permian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karoon Energy 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.| Karoon Energy vs. CNX Resources Corp | Karoon Energy vs. MV Oil Trust | Karoon Energy vs. San Juan Basin | Karoon Energy vs. VOC Energy Trust |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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