Correlation Between Ring Energy and Vista Oil

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

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

Diversification Opportunities for Ring Energy and Vista Oil

-0.59

Correlation Coefficient

Ring Energy  Vista Oil

Excellent diversification

The 3 months correlation between Ring and Vista is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy and Vista Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Oil Gas and Ring 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 Ring Energy are associated (or correlated) with Vista Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Oil Gas has no effect on the direction of Ring Energy i.e., Ring Energy and Vista Oil go up and down completely randomly.

Pair Corralation between Ring Energy and Vista Oil

Considering the 90-day investment horizon Ring Energy is expected to under-perform the Vista Oil. In addition to that, Ring Energy is 1.05 times more volatile than Vista Oil Gas. It trades about -0.08 of its total potential returns per unit of risk. Vista Oil Gas is currently generating about 0.13 per unit of volatility. If you would invest  4,738  in Vista Oil Gas on September 13, 2024 and sell it today you would earn a total of  1,076  from holding Vista Oil Gas or generate 22.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ring Energy  vs.  Vista Oil Gas

Ring Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Vista Oil Gas

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vista Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ring Energy and Vista Oil

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

The idea behind Ring Energy and Vista Oil Gas 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.