Correlation Between Riley Exploration and Crescent Energy
Can any of the company-specific risk be diversified away by investing in both Riley Exploration 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 Riley Exploration and Crescent Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Riley Exploration Permian and Crescent Energy Co, you can compare the effects of market volatilities on Riley Exploration 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 Riley Exploration with a short position of Crescent Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riley Exploration and Crescent Energy.
Diversification Opportunities for Riley Exploration and Crescent Energy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Riley and Crescent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Riley Exploration Permian and Crescent Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Energy and Riley Exploration 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 Riley Exploration Permian 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 Riley Exploration i.e., Riley Exploration and Crescent Energy go up and down completely randomly.
Pair Corralation between Riley Exploration and Crescent Energy
Given the investment horizon of 90 days Riley Exploration Permian is expected to generate 1.21 times more return on investment than Crescent Energy. However, Riley Exploration is 1.21 times more volatile than Crescent Energy Co. It trades about 0.08 of its potential returns per unit of risk. Crescent Energy Co is currently generating about 0.07 per unit of risk. If you would invest 2,074 in Riley Exploration Permian on November 3, 2024 and sell it today you would earn a total of 1,241 from holding Riley Exploration Permian or generate 59.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Riley Exploration Permian vs. Crescent Energy Co
Performance |
| Timeline |
| Riley Exploration Permian |
| Crescent Energy |
Riley Exploration and Crescent Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Riley Exploration and Crescent Energy
The main advantage of trading using opposite Riley Exploration and Crescent Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riley Exploration 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.| Riley Exploration vs. Vital Energy | Riley Exploration vs. Permian Resources | Riley Exploration vs. Magnolia Oil Gas | Riley Exploration vs. Ring Energy |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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