Correlation Between Empire Petroleum and Hess
Can any of the company-specific risk be diversified away by investing in both Empire Petroleum and Hess 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 Empire Petroleum and Hess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Petroleum Corp and Hess Corporation, you can compare the effects of market volatilities on Empire Petroleum and Hess 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 Empire Petroleum with a short position of Hess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Petroleum and Hess.
Diversification Opportunities for Empire Petroleum and Hess
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Hess is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess and Empire 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 Empire Petroleum Corp are associated (or correlated) with Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and Hess go up and down completely randomly.
Pair Corralation between Empire Petroleum and Hess
Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to generate 4.39 times more return on investment than Hess. However, Empire Petroleum is 4.39 times more volatile than Hess Corporation. It trades about 0.16 of its potential returns per unit of risk. Hess Corporation is currently generating about 0.4 per unit of risk. If you would invest 518.00 in Empire Petroleum Corp on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Empire Petroleum Corp or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Petroleum Corp vs. Hess Corp.
Performance |
| Timeline |
| Empire Petroleum Corp |
| Hess |
Empire Petroleum and Hess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Petroleum and Hess
The main advantage of trading using opposite Empire Petroleum and Hess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Petroleum position performs unexpectedly, Hess 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 Hess will offset losses from the drop in Hess' long position.| Empire Petroleum vs. PHX Minerals | Empire Petroleum vs. Mexco Energy | Empire Petroleum vs. Granite Ridge Resources | Empire Petroleum vs. XXL 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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