Correlation Between Continental Resources and APA
Can any of the company-specific risk be diversified away by investing in both Continental Resources and APA 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 Continental Resources and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Resources and APA Corporation, you can compare the effects of market volatilities on Continental Resources and APA 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 Continental Resources with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Resources and APA.
Diversification Opportunities for Continental Resources and APA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Continental and APA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Continental Resources and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Continental Resources 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 Continental Resources are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Continental Resources i.e., Continental Resources and APA go up and down completely randomly.
Pair Corralation between Continental Resources and APA
If you would invest 7,427 in Continental Resources on January 25, 2024 and sell it today you would earn a total of 0.00 from holding Continental Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Continental Resources vs. APA Corp.
Performance |
| Timeline |
| Continental Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| APA Corporation |
Continental Resources and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Resources and APA
The main advantage of trading using opposite Continental Resources and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Resources position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Continental Resources vs. Tenaris SA ADR | Continental Resources vs. Alaska Air Group | Continental Resources vs. Global Crossing Airlines | Continental Resources vs. Volaris |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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