Correlation Between Permian Resources and PBF Energy
Can any of the company-specific risk be diversified away by investing in both Permian Resources and PBF 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 PBF 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 PBF Energy, you can compare the effects of market volatilities on Permian Resources and PBF 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 PBF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and PBF Energy.
Diversification Opportunities for Permian Resources and PBF Energy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Permian and PBF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and PBF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBF 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 PBF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBF Energy has no effect on the direction of Permian Resources i.e., Permian Resources and PBF Energy go up and down completely randomly.
Pair Corralation between Permian Resources and PBF Energy
Allowing for the 90-day total investment horizon Permian Resources is expected to under-perform the PBF Energy. But the stock apears to be less risky and, when comparing its historical volatility, Permian Resources is 2.63 times less risky than PBF Energy. The stock trades about -0.15 of its potential returns per unit of risk. The PBF Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,705 in PBF Energy on November 9, 2024 and sell it today you would earn a total of 105.00 from holding PBF Energy or generate 3.88% 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. PBF Energy
Performance |
| Timeline |
| Permian Resources |
| PBF Energy |
Permian Resources and PBF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and PBF Energy
The main advantage of trading using opposite Permian Resources and PBF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, PBF 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 PBF Energy will offset losses from the drop in PBF 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 |
| PBF Energy vs. Delek Energy | PBF Energy vs. CVR Energy | PBF Energy vs. Valero Energy | PBF Energy vs. Marathon Petroleum 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |