Correlation Between Santos and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both Santos and Coterra 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 Santos and Coterra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos and Coterra Energy, you can compare the effects of market volatilities on Santos and Coterra 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 Santos with a short position of Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos and Coterra Energy.
Diversification Opportunities for Santos and Coterra Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Santos and Coterra is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Santos and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy and Santos 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 Santos are associated (or correlated) with Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Santos i.e., Santos and Coterra Energy go up and down completely randomly.
Pair Corralation between Santos and Coterra Energy
Assuming the 90 days horizon Santos is expected to generate 6.08 times less return on investment than Coterra Energy. In addition to that, Santos is 1.97 times more volatile than Coterra Energy. It trades about 0.04 of its total potential returns per unit of risk. Coterra Energy is currently generating about 0.47 per unit of volatility. If you would invest 2,288 in Coterra Energy on September 3, 2024 and sell it today you would earn a total of 384.00 from holding Coterra Energy or generate 16.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Santos vs. Coterra Energy
Performance |
| Timeline |
| Santos |
| Coterra Energy |
Santos and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos and Coterra Energy
The main advantage of trading using opposite Santos and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos position performs unexpectedly, Coterra 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 Coterra Energy will offset losses from the drop in Coterra Energy's long position.| Santos vs. CNX Resources Corp | Santos vs. MV Oil Trust | Santos vs. San Juan Basin | Santos vs. VOC Energy Trust |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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