Correlation Between Obsidian Energy and Dorchester Minerals

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

By analyzing existing cross correlation between Obsidian Energy and Dorchester Minerals LP, you can compare the effects of market volatilities on Obsidian Energy and Dorchester Minerals 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 Obsidian Energy with a short position of Dorchester Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obsidian Energy and Dorchester Minerals.

Diversification Opportunities for Obsidian Energy and Dorchester Minerals

0.0

Correlation Coefficient

Obsidian Energy  Dorchester Minerals

Pay attention - limited upside

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

Pair Corralation between Obsidian Energy and Dorchester Minerals

If you would invest  2,167  in Dorchester Minerals LP on January 26, 2024 and sell it today you would earn a total of  1,315  from holding Dorchester Minerals LP or generate 60.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Obsidian Energy  vs.  Dorchester Minerals LP

Obsidian Energy

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dorchester Minerals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dorchester Minerals LP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Dorchester Minerals may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Obsidian Energy and Dorchester Minerals

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

The idea behind Obsidian Energy and Dorchester Minerals LP 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.