Correlation Between Northern Oil and PEDEVCO Corp
Can any of the company-specific risk be diversified away by investing in both Northern Oil and PEDEVCO Corp 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 Northern Oil and PEDEVCO Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Oil Gas and PEDEVCO Corp, you can compare the effects of market volatilities on Northern Oil and PEDEVCO Corp 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 Northern Oil with a short position of PEDEVCO Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Oil and PEDEVCO Corp.
Diversification Opportunities for Northern Oil and PEDEVCO Corp
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and PEDEVCO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Northern Oil Gas and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp and Northern Oil 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 Northern Oil Gas are associated (or correlated) with PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of Northern Oil i.e., Northern Oil and PEDEVCO Corp go up and down completely randomly.
Pair Corralation between Northern Oil and PEDEVCO Corp
Considering the 90-day investment horizon Northern Oil Gas is expected to generate 1.6 times more return on investment than PEDEVCO Corp. However, Northern Oil is 1.6 times more volatile than PEDEVCO Corp. It trades about 0.29 of its potential returns per unit of risk. PEDEVCO Corp is currently generating about -0.18 per unit of risk. If you would invest 3,655 in Northern Oil Gas on August 28, 2024 and sell it today you would earn a total of 658.00 from holding Northern Oil Gas or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Oil Gas vs. PEDEVCO Corp
Performance |
| Timeline |
| Northern Oil Gas |
| PEDEVCO Corp |
Northern Oil and PEDEVCO Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Oil and PEDEVCO Corp
The main advantage of trading using opposite Northern Oil and PEDEVCO Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Oil position performs unexpectedly, PEDEVCO Corp 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 PEDEVCO Corp will offset losses from the drop in PEDEVCO Corp's long position.| Northern Oil vs. ConocoPhillips | Northern Oil vs. Occidental Petroleum | Northern Oil vs. EOG Resources | Northern Oil vs. Coterra Energy |
| PEDEVCO Corp vs. ConocoPhillips | PEDEVCO Corp vs. Occidental Petroleum | PEDEVCO Corp vs. EOG Resources | PEDEVCO Corp 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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