Correlation Between Callon Petroleum and Earthstone Energy
Can any of the company-specific risk be diversified away by investing in both Callon Petroleum and Earthstone 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 Callon Petroleum and Earthstone Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Callon Petroleum and Earthstone Energy, you can compare the effects of market volatilities on Callon Petroleum and Earthstone 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 Callon Petroleum with a short position of Earthstone Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callon Petroleum and Earthstone Energy.
Diversification Opportunities for Callon Petroleum and Earthstone Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Callon and Earthstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Callon Petroleum and Earthstone Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earthstone Energy and Callon Petroleum 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 Callon Petroleum are associated (or correlated) with Earthstone Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earthstone Energy has no effect on the direction of Callon Petroleum i.e., Callon Petroleum and Earthstone Energy go up and down completely randomly.
Pair Corralation between Callon Petroleum and Earthstone Energy
If you would invest 1,532 in Earthstone Energy on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Earthstone Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Callon Petroleum vs. Earthstone Energy
Performance |
| Timeline |
| Callon Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Callon Petroleum and Earthstone Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Callon Petroleum and Earthstone Energy
The main advantage of trading using opposite Callon Petroleum and Earthstone Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callon Petroleum position performs unexpectedly, Earthstone 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 Earthstone Energy will offset losses from the drop in Earthstone Energy's long position.| Callon Petroleum vs. SandRidge Energy | Callon Petroleum vs. Permian Resources | Callon Petroleum vs. Matador Resources | Callon Petroleum vs. Antero Resources Corp |
| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian Energy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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