Correlation Between Vista Oil and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Vista Oil and Baytex 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 Vista Oil and Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vista Oil Gas and Baytex Energy Corp, you can compare the effects of market volatilities on Vista Oil and Baytex 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 Vista Oil with a short position of Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Oil and Baytex Energy.
Diversification Opportunities for Vista Oil and Baytex Energy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vista and Baytex is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp and Vista 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 Vista Oil Gas are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Vista Oil i.e., Vista Oil and Baytex Energy go up and down completely randomly.
Pair Corralation between Vista Oil and Baytex Energy
Given the investment horizon of 90 days Vista Oil Gas is expected to generate 1.15 times more return on investment than Baytex Energy. However, Vista Oil is 1.15 times more volatile than Baytex Energy Corp. It trades about 0.13 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.1 per unit of risk. If you would invest 4,988 in Vista Oil Gas on October 20, 2024 and sell it today you would earn a total of 685.00 from holding Vista Oil Gas or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vista Oil Gas vs. Baytex Energy Corp
Performance |
| Timeline |
| Vista Oil Gas |
| Baytex Energy Corp |
Vista Oil and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vista Oil and Baytex Energy
The main advantage of trading using opposite Vista Oil and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Oil position performs unexpectedly, Baytex 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.| Vista Oil vs. Battalion Oil Corp | Vista Oil vs. Evolution Petroleum | Vista Oil vs. GeoPark | Vista Oil vs. Antero Resources Corp |
| Baytex Energy vs. Vermilion Energy | Baytex Energy vs. Obsidian Energy | Baytex Energy vs. Canadian Natural Resources | Baytex Energy vs. Ovintiv |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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