Correlation Between Berry Petroleum and Calumet Specialty

Can any of the company-specific risk be diversified away by investing in both Berry Petroleum and Calumet Specialty 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 Calumet Specialty 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 Calumet Specialty Products, you can compare the effects of market volatilities on Berry Petroleum and Calumet Specialty 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 Calumet Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berry Petroleum and Calumet Specialty.

Diversification Opportunities for Berry Petroleum and Calumet Specialty

-0.58

Correlation Coefficient

Berry Petroleum  Calumet Specialty

Excellent diversification

The 3 months correlation between Berry and Calumet is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Berry Petroleum Corp and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty 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 Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Berry Petroleum i.e., Berry Petroleum and Calumet Specialty go up and down completely randomly.

Pair Corralation between Berry Petroleum and Calumet Specialty

Considering the 90-day investment horizon Berry Petroleum Corp is expected to under-perform the Calumet Specialty. But the stock apears to be less risky and, when comparing its historical volatility, Berry Petroleum Corp is 1.07 times less risky than Calumet Specialty. The stock trades about -0.14 of its potential returns per unit of risk. The Calumet Specialty Products is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,829  in Calumet Specialty Products on September 17, 2024 and sell it today you would earn a total of  309.00  from holding Calumet Specialty Products or generate 16.89% return on investment over 90 days.

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

Berry Petroleum Corp  vs.  Calumet Specialty Products

Berry Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berry Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Calumet Specialty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calumet Specialty Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, Calumet Specialty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berry Petroleum and Calumet Specialty

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

The idea behind Berry Petroleum Corp and Calumet Specialty Products 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.