Correlation Between Vital Energy and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Vital Energy and ConocoPhillips 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 Vital Energy and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vital Energy and ConocoPhillips, you can compare the effects of market volatilities on Vital Energy and ConocoPhillips 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 Vital Energy with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Energy and ConocoPhillips.
Diversification Opportunities for Vital Energy and ConocoPhillips
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vital and ConocoPhillips is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Vital 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 Vital Energy are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Vital Energy i.e., Vital Energy and ConocoPhillips go up and down completely randomly.
Pair Corralation between Vital Energy and ConocoPhillips
Given the investment horizon of 90 days Vital Energy is expected to generate 2.67 times more return on investment than ConocoPhillips. However, Vital Energy is 2.67 times more volatile than ConocoPhillips. It trades about 0.07 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.06 per unit of risk. If you would invest 1,468 in Vital Energy on April 19, 2025 and sell it today you would earn a total of 213.00 from holding Vital Energy or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vital Energy vs. ConocoPhillips
Performance |
| Timeline |
| Vital Energy |
| ConocoPhillips |
Vital Energy and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vital Energy and ConocoPhillips
The main advantage of trading using opposite Vital Energy and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Energy position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.The idea behind Vital Energy and ConocoPhillips 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.| ConocoPhillips vs. EOG Resources | ConocoPhillips vs. Devon Energy | ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. Chevron Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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