Correlation Between ConocoPhillips and Diamondback Energy,

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

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

Diversification Opportunities for ConocoPhillips and Diamondback Energy,

0.65

Correlation Coefficient

ConocoPhillips  Diamondback Energy,

Poor diversification

The 3 months correlation between ConocoPhillips and Diamondback is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Diamondback Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondback Energy, and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with Diamondback Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamondback Energy, has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Diamondback Energy, go up and down completely randomly.

Pair Corralation between ConocoPhillips and Diamondback Energy,

Assuming the 90 days trading horizon ConocoPhillips is expected to generate 1.06 times more return on investment than Diamondback Energy,. However, ConocoPhillips is 1.06 times more volatile than Diamondback Energy,. It trades about -0.01 of its potential returns per unit of risk. Diamondback Energy, is currently generating about -0.11 per unit of risk. If you would invest  4,984  in ConocoPhillips on December 30, 2024 and sell it today you would lose (159.00) from holding ConocoPhillips or give up 3.19% of portfolio value over 90 days.

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

ConocoPhillips  vs.  Diamondback Energy,

ConocoPhillips

Risk-Adjusted Performance

Very Weak

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

Diamondback Energy,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamondback Energy, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ConocoPhillips and Diamondback Energy,

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

The idea behind ConocoPhillips and Diamondback Energy, 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.