Correlation Between Ranger Oil and Obsidian Energy

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

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

Diversification Opportunities for Ranger Oil and Obsidian Energy

0.06

Correlation Coefficient

Ranger Oil  Obsidian Energy

Significant diversification

The 3 months correlation between Ranger and Obsidian is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Oil Corp and Obsidian Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obsidian Energy and Ranger Oil 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 Ranger Oil Corp are associated (or correlated) with Obsidian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obsidian Energy has no effect on the direction of Ranger Oil i.e., Ranger Oil and Obsidian Energy go up and down completely randomly.

Pair Corralation between Ranger Oil and Obsidian Energy

If you would invest  555.00  in Obsidian Energy on October 12, 2024 and sell it today you would earn a total of  35.00  from holding Obsidian Energy or generate 6.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Ranger Oil Corp  vs.  Obsidian Energy

Ranger Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ranger Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ranger Oil is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Obsidian Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Obsidian Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Obsidian Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ranger Oil and Obsidian Energy

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

The idea behind Ranger Oil Corp and Obsidian 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.

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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.