Correlation Between Capricorn Energy and Hess
Can any of the company-specific risk be diversified away by investing in both Capricorn Energy and Hess 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 Capricorn Energy and Hess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricorn Energy PLC and Hess Corporation, you can compare the effects of market volatilities on Capricorn Energy and Hess 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 Capricorn Energy with a short position of Hess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and Hess.
Diversification Opportunities for Capricorn Energy and Hess
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capricorn and Hess is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy PLC and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess and Capricorn 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 Capricorn Energy PLC are associated (or correlated) with Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of Capricorn Energy i.e., Capricorn Energy and Hess go up and down completely randomly.
Pair Corralation between Capricorn Energy and Hess
Assuming the 90 days horizon Capricorn Energy is expected to generate 1.72 times less return on investment than Hess. In addition to that, Capricorn Energy is 3.41 times more volatile than Hess Corporation. It trades about 0.05 of its total potential returns per unit of risk. Hess Corporation is currently generating about 0.28 per unit of volatility. If you would invest 14,960 in Hess Corporation on January 26, 2024 and sell it today you would earn a total of 953.00 from holding Hess Corporation or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capricorn Energy PLC vs. Hess Corp.
Performance |
| Timeline |
| Capricorn Energy PLC |
| Hess |
Capricorn Energy and Hess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Energy and Hess
The main advantage of trading using opposite Capricorn Energy and Hess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn Energy position performs unexpectedly, Hess 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 Hess will offset losses from the drop in Hess' long position.| Capricorn Energy vs. Pioneer Natural Resources | Capricorn Energy vs. Permian Resources | Capricorn Energy vs. Devon Energy | Capricorn Energy vs. EOG Resources |
| Hess vs. Diamondback Energy | Hess vs. ConocoPhillips | Hess vs. Pioneer Natural Resources | Hess vs. APA Corporation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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