Correlation Between PrimeEnergy and Crescent Energy
Can any of the company-specific risk be diversified away by investing in both PrimeEnergy 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 PrimeEnergy and Crescent Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PrimeEnergy and Crescent Energy Co, you can compare the effects of market volatilities on PrimeEnergy 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 PrimeEnergy with a short position of Crescent Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PrimeEnergy and Crescent Energy.
Diversification Opportunities for PrimeEnergy and Crescent Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PrimeEnergy and Crescent is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding PrimeEnergy and Crescent Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Energy and PrimeEnergy 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 PrimeEnergy 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 PrimeEnergy i.e., PrimeEnergy and Crescent Energy go up and down completely randomly.
Pair Corralation between PrimeEnergy and Crescent Energy
Given the investment horizon of 90 days PrimeEnergy is expected to generate 1.65 times more return on investment than Crescent Energy. However, PrimeEnergy is 1.65 times more volatile than Crescent Energy Co. It trades about 0.16 of its potential returns per unit of risk. Crescent Energy Co is currently generating about 0.14 per unit of risk. If you would invest 12,850 in PrimeEnergy on November 2, 2024 and sell it today you would earn a total of 10,401 from holding PrimeEnergy or generate 80.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PrimeEnergy vs. Crescent Energy Co
Performance |
| Timeline |
| PrimeEnergy |
| Crescent Energy |
PrimeEnergy and Crescent Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PrimeEnergy and Crescent Energy
The main advantage of trading using opposite PrimeEnergy and Crescent Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PrimeEnergy 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.| PrimeEnergy vs. Epsilon Energy | PrimeEnergy vs. Crescent Energy Co | PrimeEnergy vs. Evolution Petroleum | PrimeEnergy vs. MorningStar Partners, LP |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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