Correlation Between E Split and Vermilion Energy
Can any of the company-specific risk be diversified away by investing in both E Split and Vermilion 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 E Split and Vermilion Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Split Corp and Vermilion Energy, you can compare the effects of market volatilities on E Split and Vermilion 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 E Split with a short position of Vermilion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Vermilion Energy.
Diversification Opportunities for E Split and Vermilion Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ENS and Vermilion is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Vermilion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vermilion Energy and E Split 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 E Split Corp are associated (or correlated) with Vermilion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vermilion Energy has no effect on the direction of E Split i.e., E Split and Vermilion Energy go up and down completely randomly.
Pair Corralation between E Split and Vermilion Energy
Assuming the 90 days trading horizon E Split is expected to generate 1.14 times less return on investment than Vermilion Energy. But when comparing it to its historical volatility, E Split Corp is 3.02 times less risky than Vermilion Energy. It trades about 0.41 of its potential returns per unit of risk. Vermilion Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,332 in Vermilion Energy on September 3, 2024 and sell it today you would earn a total of 105.00 from holding Vermilion Energy or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Split Corp vs. Vermilion Energy
Performance |
| Timeline |
| E Split Corp |
| Vermilion Energy |
E Split and Vermilion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Split and Vermilion Energy
The main advantage of trading using opposite E Split and Vermilion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split position performs unexpectedly, Vermilion 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 Vermilion Energy will offset losses from the drop in Vermilion Energy's long position.| E Split vs. Global Dividend Growth | E Split vs. Real Estate E Commerce | E Split vs. Life Banc Split | E Split vs. Brompton Split Banc |
| Vermilion Energy vs. Whitecap Resources | Vermilion Energy vs. ARC Resources | Vermilion Energy vs. Tourmaline Oil Corp | Vermilion Energy vs. MEG Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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