Correlation Between Cabo Drilling and 98385XAM8

Can any of the company-specific risk be diversified away by investing in both Cabo Drilling and 98385XAM8 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 Cabo Drilling and 98385XAM8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cabo Drilling Corp and XTO ENERGY INC, you can compare the effects of market volatilities on Cabo Drilling and 98385XAM8 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 Cabo Drilling with a short position of 98385XAM8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabo Drilling and 98385XAM8.

Diversification Opportunities for Cabo Drilling and 98385XAM8

0.0

Correlation Coefficient

Cabo Drilling  98385XAM8

Pay attention - limited upside

The 3 months correlation between Cabo and 98385XAM8 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cabo Drilling Corp and XTO ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTO ENERGY INC and Cabo Drilling 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 Cabo Drilling Corp are associated (or correlated) with 98385XAM8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTO ENERGY INC has no effect on the direction of Cabo Drilling i.e., Cabo Drilling and 98385XAM8 go up and down completely randomly.

Pair Corralation between Cabo Drilling and 98385XAM8

If you would invest  11,490  in XTO ENERGY INC on October 10, 2024 and sell it today you would earn a total of  52.00  from holding XTO ENERGY INC or generate 0.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	47.68%
Values	Daily Returns

Cabo Drilling Corp  vs.  XTO ENERGY INC

Cabo Drilling Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

XTO ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTO ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 98385XAM8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cabo Drilling and 98385XAM8

The main advantage of trading using opposite Cabo Drilling and 98385XAM8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabo Drilling position performs unexpectedly, 98385XAM8 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 98385XAM8 will offset losses from the drop in 98385XAM8's long position.

The idea behind Cabo Drilling Corp and XTO ENERGY INC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.