Correlation Between Essential Energy and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Essential Energy and Africa Oil 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 Essential Energy and Africa Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Energy Services and Africa Oil Corp, you can compare the effects of market volatilities on Essential Energy and Africa Oil 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 Essential Energy with a short position of Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Energy and Africa Oil.
Diversification Opportunities for Essential Energy and Africa Oil
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Essential and Africa is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Essential Energy Services and Africa Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Oil Corp and Essential 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 Essential Energy Services are associated (or correlated) with Africa Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Oil Corp has no effect on the direction of Essential Energy i.e., Essential Energy and Africa Oil go up and down completely randomly.
Pair Corralation between Essential Energy and Africa Oil
If you would invest 28.00 in Essential Energy Services on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Essential Energy Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Essential Energy Services vs. Africa Oil Corp
Performance |
| Timeline |
| Essential Energy Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Africa Oil Corp |
Essential Energy and Africa Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essential Energy and Africa Oil
The main advantage of trading using opposite Essential Energy and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Energy position performs unexpectedly, Africa Oil 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 Africa Oil will offset losses from the drop in Africa Oil's long position.| Essential Energy vs. Source Energy Services | Essential Energy vs. Total Energy Services | Essential Energy vs. Trican Well Service | Essential Energy vs. STEP Energy Services |
| Africa Oil vs. Petroleo Brasileiro Petrobras | Africa Oil vs. Equinor ASA ADR | Africa Oil vs. Eni SpA ADR | Africa Oil vs. YPF Sociedad Anonima |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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