Correlation Between Veren and Expand Energy

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

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

Diversification Opportunities for Veren and Expand Energy

0.52

Correlation Coefficient

Veren  Expand Energy

Very weak diversification

The 3 months correlation between Veren and Expand is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Veren Inc and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy and Veren 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 Veren Inc are associated (or correlated) with Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Veren i.e., Veren and Expand Energy go up and down completely randomly.

Pair Corralation between Veren and Expand Energy

Considering the 90-day investment horizon Veren is expected to generate 21.94 times less return on investment than Expand Energy. In addition to that, Veren is 1.09 times more volatile than Expand Energy. It trades about 0.0 of its total potential returns per unit of risk. Expand Energy is currently generating about 0.05 per unit of volatility. If you would invest  5,965  in Expand Energy on December 7, 2024 and sell it today you would earn a total of  3,380  from holding Expand Energy or generate 56.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Veren Inc  vs.  Expand Energy

Veren Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Veren Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Veren is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Expand Energy

Risk-Adjusted Performance

Weak

Over the last 90 days Expand Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Expand Energy is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Veren and Expand Energy

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

The idea behind Veren Inc and Expand 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.