Correlation Between Vital Energy and New Frontier

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

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

Diversification Opportunities for Vital Energy and New Frontier

0.0

Correlation Coefficient

Vital Energy  New Frontier

Pay attention - limited upside

The 3 months correlation between Vital and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and New Frontier Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Frontier Energy 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 New Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Frontier Energy has no effect on the direction of Vital Energy i.e., Vital Energy and New Frontier go up and down completely randomly.

Pair Corralation between Vital Energy and New Frontier

If you would invest  3,061  in Vital Energy on October 11, 2024 and sell it today you would earn a total of  374.00  from holding Vital Energy or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Vital Energy  vs.  New Frontier Energy

Vital Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

New Frontier Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Frontier Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, New Frontier is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vital Energy and New Frontier

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

The idea behind Vital Energy and New Frontier 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.