Correlation Between Coterra Energy and Athabasca Oil

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

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

Diversification Opportunities for Coterra Energy and Athabasca Oil

0.3

Correlation Coefficient

Coterra Energy  Athabasca Oil

Weak diversification

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

Pair Corralation between Coterra Energy and Athabasca Oil

Given the investment horizon of 90 days Coterra Energy is expected to generate 0.73 times more return on investment than Athabasca Oil. However, Coterra Energy is 1.36 times less risky than Athabasca Oil. It trades about 0.17 of its potential returns per unit of risk. Athabasca Oil Corp is currently generating about 0.05 per unit of risk. If you would invest  2,453  in Coterra Energy on December 24, 2024 and sell it today you would earn a total of  483.00  from holding Coterra Energy or generate 19.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Coterra Energy  vs.  Athabasca Oil Corp

Coterra Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coterra Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Coterra Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Athabasca Oil Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Athabasca Oil Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Athabasca Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Coterra Energy and Athabasca Oil

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

The idea behind Coterra Energy and Athabasca 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.