Correlation Between Permian Resources and Energy Revenue
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Energy Revenue 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 Permian Resources and Energy Revenue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Energy Revenue Amer, you can compare the effects of market volatilities on Permian Resources and Energy Revenue 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 Permian Resources with a short position of Energy Revenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Energy Revenue.
Diversification Opportunities for Permian Resources and Energy Revenue
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Permian and Energy is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Energy Revenue Amer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Revenue Amer and Permian Resources 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 Permian Resources are associated (or correlated) with Energy Revenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Revenue Amer has no effect on the direction of Permian Resources i.e., Permian Resources and Energy Revenue go up and down completely randomly.
Pair Corralation between Permian Resources and Energy Revenue
Allowing for the 90-day total investment horizon Permian Resources is expected to under-perform the Energy Revenue. But the stock apears to be less risky and, when comparing its historical volatility, Permian Resources is 24.0 times less risky than Energy Revenue. The stock trades about -0.06 of its potential returns per unit of risk. The Energy Revenue Amer is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3.51 in Energy Revenue Amer on December 1, 2024 and sell it today you would earn a total of 0.00 from holding Energy Revenue Amer or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Permian Resources vs. Energy Revenue Amer
Performance |
Timeline |
Permian Resources |
Energy Revenue Amer |
Permian Resources and Energy Revenue Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Permian Resources and Energy Revenue
The main advantage of trading using opposite Permian Resources and Energy Revenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Energy Revenue 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 Energy Revenue will offset losses from the drop in Energy Revenue's long position.Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
Energy Revenue vs. Gulfport Energy Operating | Energy Revenue vs. Magnolia Oil Gas | Energy Revenue vs. Vital Energy | Energy Revenue vs. Texas Pacific Land |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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