Correlation Between Permian Resources and Talos Energy
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Talos 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 Permian Resources and Talos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Talos Energy, you can compare the effects of market volatilities on Permian Resources and Talos 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 Permian Resources with a short position of Talos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Talos Energy.
Diversification Opportunities for Permian Resources and Talos Energy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Permian and Talos is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Talos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talos Energy 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 Talos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talos Energy has no effect on the direction of Permian Resources i.e., Permian Resources and Talos Energy go up and down completely randomly.
Pair Corralation between Permian Resources and Talos Energy
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 0.76 times more return on investment than Talos Energy. However, Permian Resources is 1.32 times less risky than Talos Energy. It trades about 0.08 of its potential returns per unit of risk. Talos Energy is currently generating about -0.05 per unit of risk. If you would invest 1,350 in Permian Resources on September 14, 2024 and sell it today you would earn a total of 126.00 from holding Permian Resources or generate 9.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Permian Resources vs. Talos Energy
Performance |
Timeline |
Permian Resources |
Talos Energy |
Permian Resources and Talos Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Permian Resources and Talos Energy
The main advantage of trading using opposite Permian Resources and Talos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Talos 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 Talos Energy will offset losses from the drop in Talos Energy's long position.Permian Resources vs. Evolution Petroleum | Permian Resources vs. Ring Energy | Permian Resources vs. Gran Tierra Energy | Permian Resources vs. PEDEVCO Corp |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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