Correlation Between Civitas Resources and Eco Oil

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

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

Diversification Opportunities for Civitas Resources and Eco Oil

0.16

Correlation Coefficient

Civitas Resources  Eco Oil

Average diversification

The 3 months correlation between Civitas and Eco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Oil Gas 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 Eco Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Oil Gas has no effect on the direction of Civitas Resources i.e., Civitas Resources and Eco Oil go up and down completely randomly.

Pair Corralation between Civitas Resources and Eco Oil

Assuming the 90 days horizon Civitas Resources is expected to generate 3.8 times more return on investment than Eco Oil. However, Civitas Resources is 3.8 times more volatile than Eco Oil Gas. It trades about 0.06 of its potential returns per unit of risk. Eco Oil Gas is currently generating about 0.03 per unit of risk. If you would invest  200.00  in Civitas Resources on September 14, 2024 and sell it today you would lose (183.00) from holding Civitas Resources or give up 91.5% of portfolio value over 90 days.

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

Civitas Resources  vs.  Eco Oil Gas

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 fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Eco Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eco 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 Civitas Resources and Eco Oil

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

The idea behind Civitas Resources and Eco 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.