Correlation Between Crescent Energy and Vermilion Energy

Can any of the company-specific risk be diversified away by investing in both Crescent Energy 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 Energy 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 Energy Co and Vermilion Energy, you can compare the effects of market volatilities on Crescent Energy 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 Energy with a short position of Vermilion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Energy and Vermilion Energy.

Diversification Opportunities for Crescent Energy and Vermilion Energy

0.96

Correlation Coefficient

Crescent Energy  Vermilion Energy

Almost no diversification

The 3 months correlation between Crescent and Vermilion is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co and Vermilion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vermilion Energy 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 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 Energy i.e., Crescent Energy and Vermilion Energy go up and down completely randomly.

Pair Corralation between Crescent Energy and Vermilion Energy

Given the investment horizon of 90 days Crescent Energy Co is expected to under-perform the Vermilion Energy. But the stock apears to be less risky and, when comparing its historical volatility, Crescent Energy Co is 1.14 times less risky than Vermilion Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Vermilion Energy is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  897.00  in Vermilion Energy on December 30, 2024 and sell it today you would lose (81.00) from holding Vermilion Energy or give up 9.03% of portfolio value over 90 days.

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

Crescent Energy Co  vs.  Vermilion Energy

Crescent Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

Vermilion Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vermilion Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Crescent Energy and Vermilion Energy

The main advantage of trading using opposite Crescent Energy and Vermilion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Energy 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 Energy Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..