Correlation Between Forza Petroleum and NuVista Energy

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

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

Diversification Opportunities for Forza Petroleum and NuVista Energy

0.0

Correlation Coefficient

Forza Petroleum  NuVista Energy

Pay attention - limited upside

The 3 months correlation between Forza and NuVista is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Forza Petroleum Limited and NuVista Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVista Energy and Forza Petroleum 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 Forza Petroleum Limited are associated (or correlated) with NuVista Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVista Energy has no effect on the direction of Forza Petroleum i.e., Forza Petroleum and NuVista Energy go up and down completely randomly.

Pair Corralation between Forza Petroleum and NuVista Energy

If you would invest  946.00  in NuVista Energy on December 29, 2024 and sell it today you would earn a total of  4.00  from holding NuVista Energy or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Forza Petroleum Limited  vs.  NuVista Energy

Forza Petroleum

Risk-Adjusted Performance

Very Weak

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

NuVista Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NuVista Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NuVista Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Forza Petroleum and NuVista Energy

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

The idea behind Forza Petroleum Limited and NuVista 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.