Correlation Between Vista Oil and Crescent Point

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

By analyzing existing cross correlation between Vista Oil Gas and Crescent Point Energy, you can compare the effects of market volatilities on Vista Oil and Crescent Point 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 Vista Oil with a short position of Crescent Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Oil and Crescent Point.

Diversification Opportunities for Vista Oil and Crescent Point

0.95

Correlation Coefficient

Vista Oil  Crescent Point

Almost no diversification

The 3 months correlation between Vista and Crescent is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and Crescent Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Point Energy and Vista Oil 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 Vista Oil Gas are associated (or correlated) with Crescent Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Point Energy has no effect on the direction of Vista Oil i.e., Vista Oil and Crescent Point go up and down completely randomly.

Pair Corralation between Vista Oil and Crescent Point

Given the investment horizon of 90 days Vista Oil Gas is expected to generate 0.94 times more return on investment than Crescent Point. However, Vista Oil Gas is 1.06 times less risky than Crescent Point. It trades about 0.05 of its potential returns per unit of risk. Crescent Point Energy is currently generating about -0.03 per unit of risk. If you would invest  4,246  in Vista Oil Gas on February 5, 2024 and sell it today you would earn a total of  74.00  from holding Vista Oil Gas or generate 1.74% return on investment over 90 days.

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

Vista Oil Gas  vs.  Crescent Point Energy

Vista Oil Gas

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vista Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crescent Point Energy

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Point Energy are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Crescent Point reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vista Oil and Crescent Point

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

The idea behind Vista Oil Gas and Crescent Point Energy 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.