Correlation Between Crescent Point and Vermilion Energy

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

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

Diversification Opportunities for Crescent Point and Vermilion Energy

-0.15

Correlation Coefficient

Crescent Point  Vermilion Energy

Good diversification

The 3 months correlation between Crescent and Vermilion is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Point Energy and Vermilion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vermilion Energy and Crescent Point 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 Crescent Point Energy are associated (or correlated) with Vermilion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vermilion Energy has no effect on the direction of Crescent Point i.e., Crescent Point and Vermilion Energy go up and down completely randomly.

Pair Corralation between Crescent Point and Vermilion Energy

If you would invest  956.00  in Vermilion Energy on August 31, 2024 and sell it today you would earn a total of  64.00  from holding Vermilion Energy or generate 6.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Crescent Point Energy  vs.  Vermilion Energy

Crescent Point Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crescent Point Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crescent Point is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vermilion Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vermilion Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Vermilion Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Crescent Point and Vermilion Energy

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

The idea behind Crescent Point Energy and Vermilion 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..