Correlation Between CNX Resources and Civitas Resources

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

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

Diversification Opportunities for CNX Resources and Civitas Resources

-0.49

Correlation Coefficient

CNX Resources  Civitas Resources

Very good diversification

The 3 months correlation between CNX and Civitas is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CNX Resources Corp and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and CNX 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 CNX Resources Corp are associated (or correlated) with Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of CNX Resources i.e., CNX Resources and Civitas Resources go up and down completely randomly.

Pair Corralation between CNX Resources and Civitas Resources

Considering the 90-day investment horizon CNX Resources Corp is expected to generate 1.09 times more return on investment than Civitas Resources. However, CNX Resources is 1.09 times more volatile than Civitas Resources. It trades about 0.28 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.07 per unit of risk. If you would invest  2,712  in CNX Resources Corp on September 3, 2024 and sell it today you would earn a total of  1,235  from holding CNX Resources Corp or generate 45.54% return on investment over 90 days.

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

CNX Resources Corp  vs.  Civitas Resources

CNX Resources Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with CNX Resources and Civitas Resources

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

The idea behind CNX Resources Corp and Civitas Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.