Correlation Between Barnwell Industries and Obsidian Energy

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Can any of the company-specific risk be diversified away by investing in both Barnwell Industries and Obsidian 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 Barnwell Industries and Obsidian Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnwell Industries and Obsidian Energy, you can compare the effects of market volatilities on Barnwell Industries and Obsidian 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 Barnwell Industries with a short position of Obsidian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and Obsidian Energy.

Diversification Opportunities for Barnwell Industries and Obsidian Energy

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Barnwell Industries and Obsidian Energy

If you would invest  222.00  in Barnwell Industries on December 30, 2023 and sell it today you would earn a total of  14.00  from holding Barnwell Industries or generate 6.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Barnwell Industries  vs.  Obsidian Energy

 Performance 
       Timeline  
Barnwell Industries 

Risk-Adjusted Performance

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Over the last 90 days Barnwell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Barnwell Industries is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Obsidian Energy 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Obsidian Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Obsidian Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Barnwell Industries and Obsidian Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barnwell Industries and Obsidian Energy

The main advantage of trading using opposite Barnwell Industries and Obsidian Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries position performs unexpectedly, Obsidian 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 Obsidian Energy will offset losses from the drop in Obsidian Energy's long position.
The idea behind Barnwell Industries and Obsidian 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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