Correlation Between Energean Oil and BP Plc
Can any of the company-specific risk be diversified away by investing in both Energean Oil and BP Plc 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 Energean Oil and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energean Oil Gas and BP plc, you can compare the effects of market volatilities on Energean Oil and BP Plc 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 Energean Oil with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energean Oil and BP Plc.
Diversification Opportunities for Energean Oil and BP Plc
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energean and BP-A is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Energean Oil Gas and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and Energean Oil 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 Energean Oil Gas are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Energean Oil i.e., Energean Oil and BP Plc go up and down completely randomly.
Pair Corralation between Energean Oil and BP Plc
Assuming the 90 days trading horizon Energean Oil Gas is expected to generate 1.8 times more return on investment than BP Plc. However, Energean Oil is 1.8 times more volatile than BP plc. It trades about 0.01 of its potential returns per unit of risk. BP plc is currently generating about -0.03 per unit of risk. If you would invest 98,073 in Energean Oil Gas on November 2, 2024 and sell it today you would lose (3,873) from holding Energean Oil Gas or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.99% |
| Values | Daily Returns |
Energean Oil Gas vs. BP plc
Performance |
| Timeline |
| Energean Oil Gas |
| BP plc |
Energean Oil and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energean Oil and BP Plc
The main advantage of trading using opposite Energean Oil and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energean Oil position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Energean Oil vs. Porvair plc | Energean Oil vs. Adriatic Metals | Energean Oil vs. Pentair PLC | Energean Oil vs. bet at home AG |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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