Correlation Between Crescent Energy and Hugoton Royalty

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

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

Diversification Opportunities for Crescent Energy and Hugoton Royalty

-0.81

Correlation Coefficient

Crescent Energy  Hugoton Royalty

Pay attention - limited upside

The 3 months correlation between Crescent and Hugoton is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co and Hugoton Royalty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugoton Royalty Trust and Crescent Energy 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 Energy Co are associated (or correlated) with Hugoton Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugoton Royalty Trust has no effect on the direction of Crescent Energy i.e., Crescent Energy and Hugoton Royalty go up and down completely randomly.

Pair Corralation between Crescent Energy and Hugoton Royalty

Given the investment horizon of 90 days Crescent Energy Co is expected to generate 0.63 times more return on investment than Hugoton Royalty. However, Crescent Energy Co is 1.59 times less risky than Hugoton Royalty. It trades about 0.05 of its potential returns per unit of risk. Hugoton Royalty Trust is currently generating about -0.14 per unit of risk. If you would invest  926.00  in Crescent Energy Co on October 5, 2024 and sell it today you would earn a total of  562.00  from holding Crescent Energy Co or generate 60.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	20.0%
Values	Daily Returns

Crescent Energy Co  vs.  Hugoton Royalty Trust

Crescent Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Energy Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Crescent Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Hugoton Royalty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hugoton Royalty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hugoton Royalty is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crescent Energy and Hugoton Royalty

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

The idea behind Crescent Energy Co and Hugoton Royalty Trust 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.