Correlation Between New Frontier and Barrel Energy
Can any of the company-specific risk be diversified away by investing in both New Frontier and Barrel 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 New Frontier and Barrel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Frontier Energy and Barrel Energy, you can compare the effects of market volatilities on New Frontier and Barrel 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 New Frontier with a short position of Barrel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Frontier and Barrel Energy.
Diversification Opportunities for New Frontier and Barrel Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and Barrel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Frontier Energy and Barrel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrel Energy and New Frontier 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 New Frontier Energy are associated (or correlated) with Barrel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrel Energy has no effect on the direction of New Frontier i.e., New Frontier and Barrel Energy go up and down completely randomly.
Pair Corralation between New Frontier and Barrel Energy
If you would invest 0.26 in Barrel Energy on August 31, 2024 and sell it today you would lose (0.03) from holding Barrel Energy or give up 11.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Frontier Energy vs. Barrel Energy
Performance |
| Timeline |
| New Frontier Energy |
| Barrel Energy |
New Frontier and Barrel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Frontier and Barrel Energy
The main advantage of trading using opposite New Frontier and Barrel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Frontier position performs unexpectedly, Barrel 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 Barrel Energy will offset losses from the drop in Barrel Energy's long position.| New Frontier vs. Barrel Energy | New Frontier vs. Gulfport Energy Operating | New Frontier vs. Magnolia Oil Gas | New Frontier vs. Vital Energy |
| Barrel Energy vs. Permian Resources | Barrel Energy vs. Devon Energy | Barrel Energy vs. EOG Resources | Barrel Energy 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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