Correlation Between Barnwell Industries and Vista Oil

Can any of the company-specific risk be diversified away by investing in both Barnwell Industries and Vista Oil 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 Barnwell Industries and Vista Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barnwell Industries and Vista Oil Gas, you can compare the effects of market volatilities on Barnwell Industries and Vista Oil 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 Barnwell Industries with a short position of Vista Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and Vista Oil.

Diversification Opportunities for Barnwell Industries and Vista Oil

-0.39

Correlation Coefficient

Barnwell Industries  Vista Oil

Very good diversification

The 3 months correlation between Barnwell and Vista is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and Vista Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Oil Gas and Barnwell Industries 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 Barnwell Industries are associated (or correlated) with Vista Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Oil Gas has no effect on the direction of Barnwell Industries i.e., Barnwell Industries and Vista Oil go up and down completely randomly.

Pair Corralation between Barnwell Industries and Vista Oil

Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the Vista Oil. But the stock apears to be less risky and, when comparing its historical volatility, Barnwell Industries is 1.04 times less risky than Vista Oil. The stock trades about -0.12 of its potential returns per unit of risk. The Vista Oil Gas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,668  in Vista Oil Gas on September 1, 2024 and sell it today you would earn a total of  655.00  from holding Vista Oil Gas or generate 14.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Barnwell Industries  vs.  Vista Oil Gas

Barnwell Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barnwell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vista Oil Gas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vista Oil may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Barnwell Industries and Vista Oil

The main advantage of trading using opposite Barnwell Industries and Vista Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries position performs unexpectedly, Vista Oil 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 Vista Oil will offset losses from the drop in Vista Oil's long position.

The idea behind Barnwell Industries and Vista Oil Gas 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.