Correlation Between SilverBow Resources and Battalion Oil

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

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

Diversification Opportunities for SilverBow Resources and Battalion Oil

0.29

Correlation Coefficient

SilverBow Resources  Battalion Oil

Modest diversification

The 3 months correlation between SilverBow and Battalion is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SilverBow Resources and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and SilverBow 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 SilverBow Resources are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of SilverBow Resources i.e., SilverBow Resources and Battalion Oil go up and down completely randomly.

Pair Corralation between SilverBow Resources and Battalion Oil

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 Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

SilverBow Resources  vs.  Battalion Oil Corp

SilverBow Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverBow Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SilverBow Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with SilverBow Resources and Battalion Oil

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

The idea behind SilverBow Resources and Battalion Oil 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.