Correlation Between Cardinal Energy and Battalion Oil

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

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

Diversification Opportunities for Cardinal Energy and Battalion Oil

0.3

Correlation Coefficient

Cardinal Energy  Battalion Oil

Weak diversification

The 3 months correlation between Cardinal and Battalion is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and Cardinal 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 Cardinal Energy are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Cardinal Energy i.e., Cardinal Energy and Battalion Oil go up and down completely randomly.

Pair Corralation between Cardinal Energy and Battalion Oil

Assuming the 90 days horizon Cardinal Energy is expected to generate 0.26 times more return on investment than Battalion Oil. However, Cardinal Energy is 3.84 times less risky than Battalion Oil. It trades about 0.01 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about -0.07 per unit of risk. If you would invest  451.00  in Cardinal Energy on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Cardinal Energy or generate 0.22% return on investment over 90 days.

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

Cardinal Energy  vs.  Battalion Oil Corp

Cardinal Energy

Risk-Adjusted Performance

Very Weak

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

Battalion Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Battalion Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cardinal Energy and Battalion Oil

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

The idea behind Cardinal Energy and Battalion Oil Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.