Correlation Between Obsidian Energy and Vital Energy
Can any of the company-specific risk be diversified away by investing in both Obsidian Energy and Vital 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 Obsidian Energy and Vital Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Obsidian Energy and Vital Energy, you can compare the effects of market volatilities on Obsidian Energy and Vital 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 Obsidian Energy with a short position of Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obsidian Energy and Vital Energy.
Diversification Opportunities for Obsidian Energy and Vital Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Obsidian and Vital is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Obsidian Energy and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Energy and Obsidian 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 Obsidian Energy are associated (or correlated) with Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of Obsidian Energy i.e., Obsidian Energy and Vital Energy go up and down completely randomly.
Pair Corralation between Obsidian Energy and Vital Energy
Considering the 90-day investment horizon Obsidian Energy is expected to generate 9.42 times less return on investment than Vital Energy. In addition to that, Obsidian Energy is 1.09 times more volatile than Vital Energy. It trades about 0.03 of its total potential returns per unit of risk. Vital Energy is currently generating about 0.34 per unit of volatility. If you would invest 2,671 in Vital Energy on August 27, 2024 and sell it today you would earn a total of 567.00 from holding Vital Energy or generate 21.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Obsidian Energy vs. Vital Energy
Performance |
| Timeline |
| Obsidian Energy |
| Vital Energy |
Obsidian Energy and Vital Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Obsidian Energy and Vital Energy
The main advantage of trading using opposite Obsidian Energy and Vital Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obsidian Energy position performs unexpectedly, Vital 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 Vital Energy will offset losses from the drop in Vital Energy's long position.| Obsidian Energy vs. Devon Energy | Obsidian Energy vs. ConocoPhillips | Obsidian Energy vs. Occidental Petroleum | Obsidian Energy vs. Permian Resources |
| Vital Energy vs. SM Energy Co | Vital Energy vs. Permian Resources | Vital Energy vs. Matador Resources | Vital Energy vs. Obsidian 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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