Correlation Between Comstock Resources and Texas Pacific

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

By analyzing existing cross correlation between Comstock Resources and Texas Pacific Land, you can compare the effects of market volatilities on Comstock Resources and Texas Pacific 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 Comstock Resources with a short position of Texas Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comstock Resources and Texas Pacific.

Diversification Opportunities for Comstock Resources and Texas Pacific

0.82

Correlation Coefficient

Comstock Resources  Texas Pacific

Very poor diversification

The 3 months correlation between Comstock and Texas is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Resources and Texas Pacific Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Pacific Land and Comstock Resources 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 Comstock Resources are associated (or correlated) with Texas Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Pacific Land has no effect on the direction of Comstock Resources i.e., Comstock Resources and Texas Pacific go up and down completely randomly.

Pair Corralation between Comstock Resources and Texas Pacific

Considering the 90-day investment horizon Comstock Resources is expected to generate 0.92 times more return on investment than Texas Pacific. However, Comstock Resources is 1.09 times less risky than Texas Pacific. It trades about 0.25 of its potential returns per unit of risk. Texas Pacific Land is currently generating about 0.16 per unit of risk. If you would invest  992.00  in Comstock Resources on September 17, 2024 and sell it today you would earn a total of  622.50  from holding Comstock Resources or generate 62.75% return on investment over 90 days.

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

Comstock Resources  vs.  Texas Pacific Land

Comstock Resources

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Comstock Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Texas Pacific Land

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Pacific Land are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Texas Pacific disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comstock Resources and Texas Pacific

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

The idea behind Comstock Resources and Texas Pacific Land 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.