Correlation Between Northern Oil and Amplify Energy

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

Diversification Opportunities for Northern Oil and Amplify Energy

  Correlation Coefficient

Weak diversification

The 3 months correlation between Northern and Amplify is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Northern Oil Gas and Amplify Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Energy Corp and Northern Oil 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 Northern Oil Gas are associated (or correlated) with Amplify Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Energy Corp has no effect on the direction of Northern Oil i.e., Northern Oil and Amplify Energy go up and down completely randomly.

Pair Corralation between Northern Oil and Amplify Energy

Considering the 90-day investment horizon Northern Oil is expected to generate 1.25 times less return on investment than Amplify Energy. But when comparing it to its historical volatility, Northern Oil Gas is 1.31 times less risky than Amplify Energy. It trades about 0.07 of its potential returns per unit of risk. Amplify Energy Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  286.00  in Amplify Energy Corp on November 1, 2022 and sell it today you would earn a total of  591.49  from holding Amplify Energy Corp or generate 206.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Northern Oil Gas  vs.  Amplify Energy Corp

 Performance (%) 
Northern Oil Gas 
Northern Performance
0 of 100
Over the last 90 days Northern Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Northern Oil is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Northern Price Channel

Amplify Energy Corp 
Amplify Performance
0 of 100
Over the last 90 days Amplify Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Amplify Price Channel

Northern Oil and Amplify Energy Volatility Contrast

   Predicted Return Density   

Pair Trading with Northern Oil and Amplify Energy

The main advantage of trading using opposite Northern Oil and Amplify Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Oil position performs unexpectedly, Amplify 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 Amplify Energy will offset losses from the drop in Amplify Energy's long position.
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The idea behind Northern Oil Gas and Amplify Energy Corp 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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