Correlation Between Civitas Resources and DT Midstream

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

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

Diversification Opportunities for Civitas Resources and DT Midstream

0.03

Correlation Coefficient

Civitas Resources  DT Midstream

Significant diversification

The 3 months correlation between Civitas and DTM is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and DT Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT Midstream and Civitas Resources 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 Civitas Resources are associated (or correlated) with DT Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT Midstream has no effect on the direction of Civitas Resources i.e., Civitas Resources and DT Midstream go up and down completely randomly.

Pair Corralation between Civitas Resources and DT Midstream

Given the investment horizon of 90 days Civitas Resources is expected to generate 2.48 times more return on investment than DT Midstream. However, Civitas Resources is 2.48 times more volatile than DT Midstream. It trades about 0.05 of its potential returns per unit of risk. DT Midstream is currently generating about 0.06 per unit of risk. If you would invest  2,682  in Civitas Resources on May 5, 2025 and sell it today you would earn a total of  191.00  from holding Civitas Resources or generate 7.12% return on investment over 90 days.

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

Civitas Resources  vs.  DT Midstream

Civitas Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Civitas Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Civitas Resources may actually be approaching a critical reversion point that can send shares even higher in September 2025.

DT Midstream

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DT Midstream are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, DT Midstream is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Civitas Resources and DT Midstream

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

The idea behind Civitas Resources and DT Midstream 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.