Correlation Between Baytex Energy and Fundamental Income

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

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

Diversification Opportunities for Baytex Energy and Fundamental Income

0.59

Correlation Coefficient

Baytex Energy  Fundamental Income

Very weak diversification

The 3 months correlation between Baytex and Fundamental is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp and Fundamental Income Net in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Income Net and Baytex 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 Baytex Energy Corp are associated (or correlated) with Fundamental Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Income Net has no effect on the direction of Baytex Energy i.e., Baytex Energy and Fundamental Income go up and down completely randomly.

Pair Corralation between Baytex Energy and Fundamental Income

Considering the 90-day investment horizon Baytex Energy Corp is expected to generate 4.41 times more return on investment than Fundamental Income. However, Baytex Energy is 4.41 times more volatile than Fundamental Income Net. It trades about 0.13 of its potential returns per unit of risk. Fundamental Income Net is currently generating about 0.0 per unit of risk. If you would invest  163.00  in Baytex Energy Corp on May 2, 2025 and sell it today you would earn a total of  50.00  from holding Baytex Energy Corp or generate 30.67% return on investment over 90 days.

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

Baytex Energy Corp  vs.  Fundamental Income Net

Baytex Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baytex Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Baytex Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fundamental Income Net

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Income Net has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fundamental Income is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Baytex Energy and Fundamental Income

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

The idea behind Baytex Energy Corp and Fundamental Income Net 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.