Correlation Between Civitas Resources and Dorchester Minerals

Can any of the company-specific risk be diversified away by investing in both Civitas Resources and Dorchester Minerals 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 Civitas Resources and Dorchester Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Civitas Resources and Dorchester Minerals LP, you can compare the effects of market volatilities on Civitas Resources and Dorchester Minerals 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 Civitas Resources with a short position of Dorchester Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civitas Resources and Dorchester Minerals.

Diversification Opportunities for Civitas Resources and Dorchester Minerals

-0.24

Correlation Coefficient

Civitas Resources  Dorchester Minerals

Very good diversification

The 3 months correlation between Civitas and Dorchester is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and Dorchester Minerals LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorchester Minerals and Civitas Resources 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 Civitas Resources are associated (or correlated) with Dorchester Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorchester Minerals has no effect on the direction of Civitas Resources i.e., Civitas Resources and Dorchester Minerals go up and down completely randomly.

Pair Corralation between Civitas Resources and Dorchester Minerals

Given the investment horizon of 90 days Civitas Resources is expected to under-perform the Dorchester Minerals. In addition to that, Civitas Resources is 1.53 times more volatile than Dorchester Minerals LP. It trades about -0.04 of its total potential returns per unit of risk. Dorchester Minerals LP is currently generating about 0.14 per unit of volatility. If you would invest  3,155  in Dorchester Minerals LP on October 6, 2024 and sell it today you would earn a total of  254.00  from holding Dorchester Minerals LP or generate 8.05% return on investment over 90 days.

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

Civitas Resources  vs.  Dorchester Minerals LP

Civitas Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civitas Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Dorchester Minerals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dorchester Minerals LP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Dorchester Minerals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Civitas Resources and Dorchester Minerals

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

The idea behind Civitas Resources and Dorchester Minerals LP 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.