Correlation Between Vital Energy and Highpeak Energy

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

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

Diversification Opportunities for Vital Energy and Highpeak Energy

0.72

Correlation Coefficient

Vital Energy  Highpeak Energy

Poor diversification

The 3 months correlation between Vital and Highpeak is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and Highpeak Energy Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highpeak Energy Acqu and Vital 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 Vital Energy are associated (or correlated) with Highpeak Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highpeak Energy Acqu has no effect on the direction of Vital Energy i.e., Vital Energy and Highpeak Energy go up and down completely randomly.

Pair Corralation between Vital Energy and Highpeak Energy

Given the investment horizon of 90 days Vital Energy is expected to under-perform the Highpeak Energy. But the stock apears to be less risky and, when comparing its historical volatility, Vital Energy is 1.08 times less risky than Highpeak Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Highpeak Energy Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,378  in Highpeak Energy Acquisition on October 7, 2024 and sell it today you would earn a total of  163.00  from holding Highpeak Energy Acquisition or generate 11.83% return on investment over 90 days.

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

Vital Energy  vs.  Highpeak Energy Acquisition

Vital Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Vital Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Highpeak Energy Acqu

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highpeak Energy Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Highpeak Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vital Energy and Highpeak Energy

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

The idea behind Vital Energy and Highpeak Energy Acquisition 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.