Correlation Between Vista Oil and Hess

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

By analyzing existing cross correlation between Vista Oil Gas and Hess Corporation, you can compare the effects of market volatilities on Vista Oil and Hess 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 Vista Oil with a short position of Hess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Oil and Hess.

Diversification Opportunities for Vista Oil and Hess

0.84

Correlation Coefficient

Vista Oil  Hess

Very poor diversification

The 3 months correlation between Vista and Hess is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess and Vista Oil 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 Vista Oil Gas are associated (or correlated) with Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of Vista Oil i.e., Vista Oil and Hess go up and down completely randomly.

Pair Corralation between Vista Oil and Hess

Given the investment horizon of 90 days Vista Oil is expected to generate 1.21 times less return on investment than Hess. In addition to that, Vista Oil is 1.76 times more volatile than Hess Corporation. It trades about 0.12 of its total potential returns per unit of risk. Hess Corporation is currently generating about 0.25 per unit of volatility. If you would invest  15,478  in Hess Corporation on January 31, 2024 and sell it today you would earn a total of  835.00  from holding Hess Corporation or generate 5.39% return on investment over 90 days.

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

Vista Oil Gas  vs.  Hess Corp.

Vista Oil Gas

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vista Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hess

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Hess unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vista Oil and Hess

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

The idea behind Vista Oil Gas and Hess Corporation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.