Correlation Between North European and Crescent Energy
Can any of the company-specific risk be diversified away by investing in both North European and Crescent 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 North European and Crescent Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North European Oil and Crescent Energy Co, you can compare the effects of market volatilities on North European and Crescent 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 North European with a short position of Crescent Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of North European and Crescent Energy.
Diversification Opportunities for North European and Crescent Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between North and Crescent is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding North European Oil and Crescent Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Energy and North European 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 North European Oil are associated (or correlated) with Crescent Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Energy has no effect on the direction of North European i.e., North European and Crescent Energy go up and down completely randomly.
Pair Corralation between North European and Crescent Energy
Considering the 90-day investment horizon North European Oil is expected to under-perform the Crescent Energy. In addition to that, North European is 1.44 times more volatile than Crescent Energy Co. It trades about -0.03 of its total potential returns per unit of risk. Crescent Energy Co is currently generating about 0.03 per unit of volatility. If you would invest 1,157 in Crescent Energy Co on August 27, 2024 and sell it today you would earn a total of 371.00 from holding Crescent Energy Co or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North European Oil vs. Crescent Energy Co
Performance |
| Timeline |
| North European Oil |
| Crescent Energy |
North European and Crescent Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North European and Crescent Energy
The main advantage of trading using opposite North European and Crescent Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North European position performs unexpectedly, Crescent 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 Crescent Energy will offset losses from the drop in Crescent Energy's long position.| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
| Crescent Energy vs. Vital Energy | Crescent Energy vs. Permian Resources | Crescent Energy vs. Magnolia Oil Gas | Crescent Energy vs. Ring 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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