Correlation Between Battalion Oil and Crescent Energy

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

By analyzing existing cross correlation between Battalion Oil Corp and Crescent Energy Co, you can compare the effects of market volatilities on Battalion Oil and Crescent 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 Battalion Oil with a short position of Crescent Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and Crescent Energy.

Diversification Opportunities for Battalion Oil and Crescent Energy

-0.41

Correlation Coefficient

Battalion Oil  Crescent Energy

Very good diversification

The 3 months correlation between Battalion and Crescent is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and Crescent Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Energy and Battalion 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 Battalion Oil Corp are associated (or correlated) with Crescent Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Energy has no effect on the direction of Battalion Oil i.e., Battalion Oil and Crescent Energy go up and down completely randomly.

Pair Corralation between Battalion Oil and Crescent Energy

Given the investment horizon of 90 days Battalion Oil Corp is expected to generate 6.62 times more return on investment than Crescent Energy. However, Battalion Oil is 6.62 times more volatile than Crescent Energy Co. It trades about 0.06 of its potential returns per unit of risk. Crescent Energy Co is currently generating about 0.18 per unit of risk. If you would invest  305.00  in Battalion Oil Corp on September 17, 2024 and sell it today you would lose (3.00) from holding Battalion Oil Corp or give up 0.98% of portfolio value over 90 days.

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

Battalion Oil Corp  vs.  Crescent Energy Co

Battalion Oil Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Battalion Oil Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Battalion Oil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Crescent Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Energy Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Crescent Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Battalion Oil and Crescent Energy

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

The idea behind Battalion Oil Corp and Crescent Energy Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.