Correlation Between Barnwell Industries and Epsilon Energy
Can any of the company-specific risk be diversified away by investing in both Barnwell Industries and Epsilon Energy 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 Barnwell Industries and Epsilon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnwell Industries and Epsilon Energy, you can compare the effects of market volatilities on Barnwell Industries and Epsilon Energy 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 Barnwell Industries with a short position of Epsilon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and Epsilon Energy.
Diversification Opportunities for Barnwell Industries and Epsilon Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barnwell and Epsilon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and Epsilon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Energy and Barnwell Industries 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 Barnwell Industries are associated (or correlated) with Epsilon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epsilon Energy has no effect on the direction of Barnwell Industries i.e., Barnwell Industries and Epsilon Energy go up and down completely randomly.
Pair Corralation between Barnwell Industries and Epsilon Energy
Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the Epsilon Energy. In addition to that, Barnwell Industries is 1.49 times more volatile than Epsilon Energy. It trades about -0.03 of its total potential returns per unit of risk. Epsilon Energy is currently generating about 0.01 per unit of volatility. If you would invest 607.00 in Epsilon Energy on August 27, 2024 and sell it today you would lose (3.00) from holding Epsilon Energy or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnwell Industries vs. Epsilon Energy
Performance |
| Timeline |
| Barnwell Industries |
| Epsilon Energy |
Barnwell Industries and Epsilon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnwell Industries and Epsilon Energy
The main advantage of trading using opposite Barnwell Industries and Epsilon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries position performs unexpectedly, Epsilon Energy 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 Epsilon Energy will offset losses from the drop in Epsilon Energy's long position.| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring Energy |
| Epsilon Energy vs. Vaalco Energy | Epsilon Energy vs. PHX Minerals | Epsilon Energy vs. Northern Oil Gas | Epsilon Energy vs. Granite Ridge Resources |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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