Correlation Between Baytex Energy and Index Oil

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

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

Diversification Opportunities for Baytex Energy and Index Oil

0.0

Correlation Coefficient

Baytex Energy  Index Oil

Pay attention - limited upside

The 3 months correlation between Baytex and Index is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp and Index Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Index Oil and Baytex Energy 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 Baytex Energy Corp are associated (or correlated) with Index Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Index Oil has no effect on the direction of Baytex Energy i.e., Baytex Energy and Index Oil go up and down completely randomly.

Pair Corralation between Baytex Energy and Index Oil

If you would invest  241.00  in Baytex Energy Corp on October 25, 2024 and sell it today you would earn a total of  15.00  from holding Baytex Energy Corp or generate 6.22% return on investment over 90 days.

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

Baytex Energy Corp  vs.  Index Oil and

Baytex Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baytex Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Index Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Index Oil and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Index Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Baytex Energy and Index Oil

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

The idea behind Baytex Energy Corp and Index Oil and 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.