Correlation Between Permian Resources and Calumet Specialty
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Calumet Specialty 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 Calumet Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Calumet Specialty Products, you can compare the effects of market volatilities on Permian Resources and Calumet Specialty 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 Calumet Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Calumet Specialty.
Diversification Opportunities for Permian Resources and Calumet Specialty
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Permian and Calumet is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty 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 Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Permian Resources i.e., Permian Resources and Calumet Specialty go up and down completely randomly.
Pair Corralation between Permian Resources and Calumet Specialty
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 0.55 times more return on investment than Calumet Specialty. However, Permian Resources is 1.81 times less risky than Calumet Specialty. It trades about 0.38 of its potential returns per unit of risk. Calumet Specialty Products is currently generating about 0.09 per unit of risk. If you would invest 1,349 in Permian Resources on September 1, 2024 and sell it today you would earn a total of 217.00 from holding Permian Resources or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Permian Resources vs. Calumet Specialty Products
Performance |
| Timeline |
| Permian Resources |
| Calumet Specialty |
Permian Resources and Calumet Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and Calumet Specialty
The main advantage of trading using opposite Permian Resources and Calumet Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Calumet Specialty 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 Calumet Specialty will offset losses from the drop in Calumet Specialty's long position.| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
| Calumet Specialty vs. Battalion Oil Corp | Calumet Specialty vs. Granite Ridge Resources | Calumet Specialty vs. GeoPark | Calumet Specialty vs. Crescent Energy Co |
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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