Correlation Between Northern Oil and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Northern Oil and Baytex Energy 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 Northern Oil and Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Oil Gas and Baytex Energy Corp, you can compare the effects of market volatilities on Northern Oil and Baytex Energy 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 Northern Oil with a short position of Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Oil and Baytex Energy.
Diversification Opportunities for Northern Oil and Baytex Energy
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and Baytex is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Northern Oil Gas and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp and Northern 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 Northern Oil Gas are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Northern Oil i.e., Northern Oil and Baytex Energy go up and down completely randomly.
Pair Corralation between Northern Oil and Baytex Energy
Considering the 90-day investment horizon Northern Oil is expected to generate 9.3 times less return on investment than Baytex Energy. But when comparing it to its historical volatility, Northern Oil Gas is 1.28 times less risky than Baytex Energy. It trades about 0.03 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Baytex Energy Corp on September 8, 2025 and sell it today you would earn a total of 107.00 from holding Baytex Energy Corp or generate 49.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Oil Gas vs. Baytex Energy Corp
Performance |
| Timeline |
| Northern Oil Gas |
| Baytex Energy Corp |
Northern Oil and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Oil and Baytex Energy
The main advantage of trading using opposite Northern Oil and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Oil position performs unexpectedly, Baytex Energy 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.| Northern Oil vs. Heritage Insurance Hldgs | Northern Oil vs. Loans4LessCom | Northern Oil vs. First Ship Lease | Northern Oil vs. Willis Lease Finance |
| Baytex Energy vs. Tonopah Divide Mining | Baytex Energy vs. Coeur Mining | Baytex Energy vs. Jones Soda Co | Baytex Energy vs. Warner Music Group |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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