Correlation Between Chord Energy and Epsilon Energy
Can any of the company-specific risk be diversified away by investing in both Chord Energy 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 Chord Energy and Epsilon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chord Energy Corp and Epsilon Energy, you can compare the effects of market volatilities on Chord Energy 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 Chord Energy with a short position of Epsilon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chord Energy and Epsilon Energy.
Diversification Opportunities for Chord Energy and Epsilon Energy
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chord and Epsilon is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chord Energy Corp and Epsilon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Energy and Chord 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 Chord Energy Corp 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 Chord Energy i.e., Chord Energy and Epsilon Energy go up and down completely randomly.
Pair Corralation between Chord Energy and Epsilon Energy
Given the investment horizon of 90 days Chord Energy Corp is expected to under-perform the Epsilon Energy. But the stock apears to be less risky and, when comparing its historical volatility, Chord Energy Corp is 1.16 times less risky than Epsilon Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Epsilon Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 550.00 in Epsilon Energy on September 1, 2024 and sell it today you would earn a total of 32.00 from holding Epsilon Energy or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chord Energy Corp vs. Epsilon Energy
Performance |
| Timeline |
| Chord Energy Corp |
| Epsilon Energy |
Chord Energy and Epsilon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chord Energy and Epsilon Energy
The main advantage of trading using opposite Chord Energy and Epsilon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chord Energy 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.| Chord Energy vs. Civitas Resources | Chord Energy vs. Coterra Energy | Chord Energy vs. HF Sinclair Corp | Chord Energy vs. Magnolia Oil Gas |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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