Correlation Between Baytex Energy and SPDR Portfolio

Can any of the company-specific risk be diversified away by investing in both Baytex Energy and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Baytex Energy and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baytex Energy and SPDR Portfolio.

Diversification Opportunities for Baytex Energy and SPDR Portfolio

0.6

Correlation Coefficient

Baytex Energy  SPDR Portfolio

Poor diversification

The 3 months correlation between Baytex and SPDR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Baytex Energy i.e., Baytex Energy and SPDR Portfolio go up and down completely randomly.

Pair Corralation between Baytex Energy and SPDR Portfolio

Considering the 90-day investment horizon Baytex Energy Corp is expected to generate 3.27 times more return on investment than SPDR Portfolio. However, Baytex Energy is 3.27 times more volatile than SPDR Portfolio SP. It trades about 0.16 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.09 per unit of risk. If you would invest  152.00  in Baytex Energy Corp on May 4, 2025 and sell it today you would earn a total of  58.00  from holding Baytex Energy Corp or generate 38.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Baytex Energy Corp  vs.  SPDR Portfolio SP

Baytex Energy Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baytex Energy Corp are ranked lower than 12 (%) 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.

SPDR Portfolio SP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, SPDR Portfolio may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Baytex Energy and SPDR Portfolio

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

The idea behind Baytex Energy Corp and SPDR Portfolio SP 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.

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.