Correlation Between PEDEVCO Corp and California Resources

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

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

Diversification Opportunities for PEDEVCO Corp and California Resources

-0.28

Correlation Coefficient

PEDEVCO Corp  California Resources

Very good diversification

The 3 months correlation between PEDEVCO and California is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PEDEVCO Corp and California Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources Corp and PEDEVCO Corp 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 PEDEVCO Corp are associated (or correlated) with California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources Corp has no effect on the direction of PEDEVCO Corp i.e., PEDEVCO Corp and California Resources go up and down completely randomly.

Pair Corralation between PEDEVCO Corp and California Resources

Considering the 90-day investment horizon PEDEVCO Corp is expected to under-perform the California Resources. In addition to that, PEDEVCO Corp is 1.17 times more volatile than California Resources Corp. It trades about -0.06 of its total potential returns per unit of risk. California Resources Corp is currently generating about 0.13 per unit of volatility. If you would invest  4,895  in California Resources Corp on September 5, 2024 and sell it today you would earn a total of  838.00  from holding California Resources Corp or generate 17.12% return on investment over 90 days.

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

PEDEVCO Corp  vs.  California Resources Corp

PEDEVCO Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEDEVCO Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

California Resources Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in California Resources Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, California Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PEDEVCO Corp and California Resources

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

The idea behind PEDEVCO Corp and California Resources 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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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.