Correlation Between Permian Resources and Barrel Energy
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Barrel 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 Permian Resources and Barrel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Barrel Energy, you can compare the effects of market volatilities on Permian Resources and Barrel 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 Permian Resources with a short position of Barrel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Barrel Energy.
Diversification Opportunities for Permian Resources and Barrel Energy
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Permian and Barrel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Barrel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrel Energy and Permian Resources 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 Permian Resources are associated (or correlated) with Barrel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrel Energy has no effect on the direction of Permian Resources i.e., Permian Resources and Barrel Energy go up and down completely randomly.
Pair Corralation between Permian Resources and Barrel Energy
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 0.13 times more return on investment than Barrel Energy. However, Permian Resources is 7.51 times less risky than Barrel Energy. It trades about 0.33 of its potential returns per unit of risk. Barrel Energy is currently generating about 0.03 per unit of risk. If you would invest 1,359 in Permian Resources on August 31, 2024 and sell it today you would earn a total of 200.00 from holding Permian Resources or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Permian Resources vs. Barrel Energy
Performance |
| Timeline |
| Permian Resources |
| Barrel Energy |
Permian Resources and Barrel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and Barrel Energy
The main advantage of trading using opposite Permian Resources and Barrel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Barrel 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 Barrel Energy will offset losses from the drop in Barrel Energy's long position.| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
| Barrel Energy vs. Permian Resources | Barrel Energy vs. Devon Energy | Barrel Energy vs. EOG Resources | Barrel Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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