Correlation Between VOC Energy and California Resources

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

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

Diversification Opportunities for VOC Energy and California Resources

0.05

Correlation Coefficient

VOC Energy  California Resources

Significant diversification

The 3 months correlation between VOC and California is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding VOC Energy Trust 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 VOC Energy 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 VOC Energy Trust 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 VOC Energy i.e., VOC Energy and California Resources go up and down completely randomly.

Pair Corralation between VOC Energy and California Resources

Considering the 90-day investment horizon VOC Energy Trust is expected to generate 0.61 times more return on investment than California Resources. However, VOC Energy Trust is 1.64 times less risky than California Resources. It trades about -0.12 of its potential returns per unit of risk. California Resources Corp is currently generating about -0.11 per unit of risk. If you would invest  507.00  in VOC Energy Trust on September 18, 2024 and sell it today you would lose (18.00) from holding VOC Energy Trust or give up 3.55% of portfolio value over 90 days.

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

VOC Energy Trust  vs.  California Resources Corp

VOC Energy Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VOC Energy Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, VOC Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

California Resources Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in California Resources Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, California Resources is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VOC Energy and California Resources

The main advantage of trading using opposite VOC Energy and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOC Energy 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 VOC Energy Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.