Correlation Between Otto Energy and Battalion Oil
Can any of the company-specific risk be diversified away by investing in both Otto Energy and Battalion Oil 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 Otto Energy and Battalion Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otto Energy Limited and Battalion Oil Corp, you can compare the effects of market volatilities on Otto Energy and Battalion Oil 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 Otto Energy with a short position of Battalion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otto Energy and Battalion Oil.
Diversification Opportunities for Otto Energy and Battalion Oil
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Otto and Battalion is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Otto Energy Limited and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and Otto 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 Otto Energy Limited are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Otto Energy i.e., Otto Energy and Battalion Oil go up and down completely randomly.
Pair Corralation between Otto Energy and Battalion Oil
Assuming the 90 days horizon Otto Energy Limited is expected to generate 4.8 times more return on investment than Battalion Oil. However, Otto Energy is 4.8 times more volatile than Battalion Oil Corp. It trades about 0.08 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about 0.06 per unit of risk. If you would invest 1.94 in Otto Energy Limited on August 29, 2024 and sell it today you would lose (1.63) from holding Otto Energy Limited or give up 84.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Otto Energy Limited vs. Battalion Oil Corp
Performance |
| Timeline |
| Otto Energy Limited |
| Battalion Oil Corp |
Otto Energy and Battalion Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otto Energy and Battalion Oil
The main advantage of trading using opposite Otto Energy and Battalion Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otto Energy position performs unexpectedly, Battalion Oil 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 Battalion Oil will offset losses from the drop in Battalion Oil's long position.| Otto Energy vs. Petro Viking Energy | Otto Energy vs. Foothills Exploration | Otto Energy vs. MMEX Resources Corp | Otto Energy vs. Alvopetro Energy |
| Battalion Oil vs. Epsilon Energy | Battalion Oil vs. Citizens Community Bancorp | Battalion Oil vs. Perma Pipe International Holdings | Battalion Oil vs. Amplify Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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