Correlation Between Vista Oil and ConocoPhillips

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

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

Diversification Opportunities for Vista Oil and ConocoPhillips

-0.39

Correlation Coefficient

Vista Oil  ConocoPhillips

Very good diversification

The 3 months correlation between Vista and ConocoPhillips is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Vista 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 Vista Oil Gas are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Vista Oil i.e., Vista Oil and ConocoPhillips go up and down completely randomly.

Pair Corralation between Vista Oil and ConocoPhillips

Given the investment horizon of 90 days Vista Oil Gas is expected to generate 2.32 times more return on investment than ConocoPhillips. However, Vista Oil is 2.32 times more volatile than ConocoPhillips. It trades about 0.16 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.48 per unit of risk. If you would invest  4,988  in Vista Oil Gas on September 20, 2024 and sell it today you would earn a total of  503.00  from holding Vista Oil Gas or generate 10.08% return on investment over 90 days.

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

Vista Oil Gas  vs.  ConocoPhillips

Vista Oil Gas

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 7 (%) 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.

ConocoPhillips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConocoPhillips has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Vista Oil and ConocoPhillips

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

The idea behind Vista Oil Gas and ConocoPhillips 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.