Correlation Between Calumet Specialty and Evolution Petroleum
Can any of the company-specific risk be diversified away by investing in both Calumet Specialty and Evolution Petroleum 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 Calumet Specialty and Evolution Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Calumet Specialty Products and Evolution Petroleum, you can compare the effects of market volatilities on Calumet Specialty and Evolution Petroleum 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 Calumet Specialty with a short position of Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calumet Specialty and Evolution Petroleum.
Diversification Opportunities for Calumet Specialty and Evolution Petroleum
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Calumet and Evolution is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum and Calumet Specialty 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 Calumet Specialty Products are associated (or correlated) with Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of Calumet Specialty i.e., Calumet Specialty and Evolution Petroleum go up and down completely randomly.
Pair Corralation between Calumet Specialty and Evolution Petroleum
Given the investment horizon of 90 days Calumet Specialty Products is expected to generate 1.05 times more return on investment than Evolution Petroleum. However, Calumet Specialty is 1.05 times more volatile than Evolution Petroleum. It trades about 0.16 of its potential returns per unit of risk. Evolution Petroleum is currently generating about 0.06 per unit of risk. If you would invest 2,033 in Calumet Specialty Products on September 13, 2024 and sell it today you would earn a total of 135.50 from holding Calumet Specialty Products or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Calumet Specialty Products vs. Evolution Petroleum
Performance |
| Timeline |
| Calumet Specialty |
| Evolution Petroleum |
Calumet Specialty and Evolution Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Calumet Specialty and Evolution Petroleum
The main advantage of trading using opposite Calumet Specialty and Evolution Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calumet Specialty position performs unexpectedly, Evolution Petroleum 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 Evolution Petroleum will offset losses from the drop in Evolution Petroleum's long position.| Calumet Specialty vs. Vital Energy | Calumet Specialty vs. Permian Resources | Calumet Specialty vs. Magnolia Oil Gas | Calumet Specialty vs. Ring Energy |
| Evolution Petroleum vs. GeoPark | Evolution Petroleum vs. Granite Ridge Resources | Evolution Petroleum vs. PHX Minerals | Evolution Petroleum vs. California Resources Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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