Correlation Between ConocoPhillips and Pioneer Natural
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Pioneer Natural 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 ConocoPhillips and Pioneer Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Pioneer Natural Resources, you can compare the effects of market volatilities on ConocoPhillips and Pioneer Natural 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 ConocoPhillips with a short position of Pioneer Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Pioneer Natural.
Diversification Opportunities for ConocoPhillips and Pioneer Natural
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConocoPhillips and Pioneer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Pioneer Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Natural Resources and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with Pioneer Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Natural Resources has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Pioneer Natural go up and down completely randomly.
Pair Corralation between ConocoPhillips and Pioneer Natural
Assuming the 90 days horizon ConocoPhillips is expected to generate 0.26 times more return on investment than Pioneer Natural. However, ConocoPhillips is 3.82 times less risky than Pioneer Natural. It trades about -0.46 of its potential returns per unit of risk. Pioneer Natural Resources is currently generating about -0.16 per unit of risk. If you would invest 10,654 in ConocoPhillips on September 23, 2024 and sell it today you would lose (1,523) from holding ConocoPhillips or give up 14.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 86.36% |
Values | Daily Returns |
ConocoPhillips vs. Pioneer Natural Resources
Performance |
Timeline |
ConocoPhillips |
Pioneer Natural Resources |
ConocoPhillips and Pioneer Natural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ConocoPhillips and Pioneer Natural
The main advantage of trading using opposite ConocoPhillips and Pioneer Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Pioneer Natural 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 Pioneer Natural will offset losses from the drop in Pioneer Natural's long position.ConocoPhillips vs. Alibaba Group Holding | ConocoPhillips vs. CNOOC | ConocoPhillips vs. EOG Resources | ConocoPhillips vs. Canadian Natural Resources |
Pioneer Natural vs. Alibaba Group Holding | Pioneer Natural vs. ConocoPhillips | Pioneer Natural vs. CNOOC | Pioneer Natural vs. EOG Resources |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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