Correlation Between Pantheon Resources and Cross Timbers

Can any of the company-specific risk be diversified away by investing in both Pantheon Resources and Cross Timbers 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 Pantheon Resources and Cross Timbers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pantheon Resources Plc and Cross Timbers Royalty, you can compare the effects of market volatilities on Pantheon Resources and Cross Timbers 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 Pantheon Resources with a short position of Cross Timbers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pantheon Resources and Cross Timbers.

Diversification Opportunities for Pantheon Resources and Cross Timbers

0.0

Correlation Coefficient

Pantheon Resources  Cross Timbers

Pay attention - limited upside

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

Pair Corralation between Pantheon Resources and Cross Timbers

Assuming the 90 days horizon Pantheon Resources Plc is expected to generate 2.24 times more return on investment than Cross Timbers. However, Pantheon Resources is 2.24 times more volatile than Cross Timbers Royalty. It trades about 0.17 of its potential returns per unit of risk. Cross Timbers Royalty is currently generating about 0.08 per unit of risk. If you would invest  21.00  in Pantheon Resources Plc on September 17, 2024 and sell it today you would earn a total of  14.00  from holding Pantheon Resources Plc or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pantheon Resources Plc  vs.  Cross Timbers Royalty

Pantheon Resources Plc

Risk-Adjusted Performance

13 of 100

Good

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

Cross Timbers Royalty

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cross Timbers Royalty are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cross Timbers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pantheon Resources and Cross Timbers

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

The idea behind Pantheon Resources Plc and Cross Timbers Royalty 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.