Correlation Between Tullow Oil and CNX Resources

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Can any of the company-specific risk be diversified away by investing in both Tullow Oil and CNX Resources 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 Tullow Oil and CNX Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tullow Oil plc and CNX Resources Corp, you can compare the effects of market volatilities on Tullow Oil and CNX Resources 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 Tullow Oil with a short position of CNX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tullow Oil and CNX Resources.

Diversification Opportunities for Tullow Oil and CNX Resources

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Tullow and CNX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tullow Oil plc and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and Tullow Oil 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 Tullow Oil plc are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Tullow Oil i.e., Tullow Oil and CNX Resources go up and down completely randomly.

Pair Corralation between Tullow Oil and CNX Resources

Assuming the 90 days horizon Tullow Oil is expected to generate 59.5 times less return on investment than CNX Resources. In addition to that, Tullow Oil is 2.33 times more volatile than CNX Resources Corp. It trades about 0.0 of its total potential returns per unit of risk. CNX Resources Corp is currently generating about 0.1 per unit of volatility. If you would invest  1,659  in CNX Resources Corp on September 12, 2024 and sell it today you would earn a total of  2,030  from holding CNX Resources Corp or generate 122.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Tullow Oil plc  vs.  CNX Resources Corp

 Performance 
       Timeline  
Tullow Oil plc 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Tullow Oil plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Tullow Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
CNX Resources Corp 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Tullow Oil and CNX Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tullow Oil and CNX Resources

The main advantage of trading using opposite Tullow Oil and CNX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tullow Oil position performs unexpectedly, CNX Resources 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 CNX Resources will offset losses from the drop in CNX Resources' long position.
The idea behind Tullow Oil plc and CNX Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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