Correlation Between Amplify Energy and Civitas Resources

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

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

Diversification Opportunities for Amplify Energy and Civitas Resources

0.55

Correlation Coefficient

Amplify Energy  Civitas Resources

Very weak diversification

The 3 months correlation between Amplify and Civitas is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amplify Energy Corp and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and Amplify 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 Amplify Energy Corp are associated (or correlated) with Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Amplify Energy i.e., Amplify Energy and Civitas Resources go up and down completely randomly.

Pair Corralation between Amplify Energy and Civitas Resources

Given the investment horizon of 90 days Amplify Energy Corp is expected to generate 1.43 times more return on investment than Civitas Resources. However, Amplify Energy is 1.43 times more volatile than Civitas Resources. It trades about 0.01 of its potential returns per unit of risk. Civitas Resources is currently generating about 0.01 per unit of risk. If you would invest  755.00  in Amplify Energy Corp on June 23, 2024 and sell it today you would lose (90.00) from holding Amplify Energy Corp or give up 11.92% of portfolio value over 90 days.

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

Amplify Energy Corp  vs.  Civitas Resources

Amplify Energy Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amplify Energy Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amplify Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Civitas Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civitas Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in October 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Amplify Energy and Civitas Resources

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

The idea behind Amplify Energy Corp and Civitas Resources 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.