Correlation Between ConocoPhillips and Tellurian

Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Tellurian 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 Tellurian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConocoPhillips and Tellurian, you can compare the effects of market volatilities on ConocoPhillips and Tellurian 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 Tellurian. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Tellurian.

Diversification Opportunities for ConocoPhillips and Tellurian

-0.3

Correlation Coefficient

ConocoPhillips  Tellurian

Very good diversification

The 3 months correlation between ConocoPhillips and Tellurian is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Tellurian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tellurian 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 Tellurian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tellurian has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Tellurian go up and down completely randomly.

Pair Corralation between ConocoPhillips and Tellurian

Considering the 90-day investment horizon ConocoPhillips is expected to generate 0.11 times more return on investment than Tellurian. However, ConocoPhillips is 8.9 times less risky than Tellurian. It trades about 0.24 of its potential returns per unit of risk. Tellurian is currently generating about 0.02 per unit of risk. If you would invest  10,967  in ConocoPhillips on January 24, 2024 and sell it today you would earn a total of  1,966  from holding ConocoPhillips or generate 17.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ConocoPhillips  vs.  Tellurian

ConocoPhillips

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, ConocoPhillips reported solid returns over the last few months and may actually be approaching a breakup point.

Tellurian

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tellurian are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Tellurian disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ConocoPhillips and Tellurian

The main advantage of trading using opposite ConocoPhillips and Tellurian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Tellurian 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 Tellurian will offset losses from the drop in Tellurian's long position.

The idea behind ConocoPhillips and Tellurian 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.