Correlation Between Berry Petroleum and Northern Oil
Can any of the company-specific risk be diversified away by investing in both Berry Petroleum and Northern Oil 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 Berry Petroleum and Northern Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berry Petroleum Corp and Northern Oil Gas, you can compare the effects of market volatilities on Berry Petroleum and Northern Oil 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 Berry Petroleum with a short position of Northern Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berry Petroleum and Northern Oil.
Diversification Opportunities for Berry Petroleum and Northern Oil
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Berry and Northern is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Berry Petroleum Corp and Northern Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Oil Gas and Berry Petroleum 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 Berry Petroleum Corp are associated (or correlated) with Northern Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Oil Gas has no effect on the direction of Berry Petroleum i.e., Berry Petroleum and Northern Oil go up and down completely randomly.
Pair Corralation between Berry Petroleum and Northern Oil
Considering the 90-day investment horizon Berry Petroleum is expected to generate 1.17 times less return on investment than Northern Oil. In addition to that, Berry Petroleum is 1.19 times more volatile than Northern Oil Gas. It trades about 0.05 of its total potential returns per unit of risk. Northern Oil Gas is currently generating about 0.07 per unit of volatility. If you would invest 3,197 in Northern Oil Gas on January 26, 2024 and sell it today you would earn a total of 1,100 from holding Northern Oil Gas or generate 34.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Berry Petroleum Corp vs. Northern Oil Gas
Performance |
Timeline |
Berry Petroleum Corp |
Northern Oil Gas |
Berry Petroleum and Northern Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Berry Petroleum and Northern Oil
The main advantage of trading using opposite Berry Petroleum and Northern Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berry Petroleum position performs unexpectedly, Northern Oil 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 Northern Oil will offset losses from the drop in Northern Oil's long position.Berry Petroleum vs. California Resources Corp | Berry Petroleum vs. Magnolia Oil Gas | Berry Petroleum vs. Comstock Resources | Berry Petroleum vs. Gulfport Energy Operating |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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