Correlation Between Evolution Petroleum and Southwestern Energy
Can any of the company-specific risk be diversified away by investing in both Evolution Petroleum and Southwestern 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 Evolution Petroleum and Southwestern Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Petroleum and Southwestern Energy, you can compare the effects of market volatilities on Evolution Petroleum and Southwestern 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 Evolution Petroleum with a short position of Southwestern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Petroleum and Southwestern Energy.
Diversification Opportunities for Evolution Petroleum and Southwestern Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Evolution and Southwestern is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Petroleum and Southwestern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern Energy and Evolution 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 Evolution Petroleum are associated (or correlated) with Southwestern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy has no effect on the direction of Evolution Petroleum i.e., Evolution Petroleum and Southwestern Energy go up and down completely randomly.
Pair Corralation between Evolution Petroleum and Southwestern Energy
Considering the 90-day investment horizon Evolution Petroleum is expected to generate 4.59 times less return on investment than Southwestern Energy. In addition to that, Evolution Petroleum is 1.45 times more volatile than Southwestern Energy. It trades about 0.06 of its total potential returns per unit of risk. Southwestern Energy is currently generating about 0.41 per unit of volatility. If you would invest 617.00 in Southwestern Energy on November 2, 2024 and sell it today you would earn a total of 94.00 from holding Southwestern Energy or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 20.39% |
| Values | Daily Returns |
Evolution Petroleum vs. Southwestern Energy
Performance |
| Timeline |
| Evolution Petroleum |
| Southwestern Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Evolution Petroleum and Southwestern Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Petroleum and Southwestern Energy
The main advantage of trading using opposite Evolution Petroleum and Southwestern Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Petroleum position performs unexpectedly, Southwestern 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 Southwestern Energy will offset losses from the drop in Southwestern Energy's long position.| Evolution Petroleum vs. GeoPark | Evolution Petroleum vs. Granite Ridge Resources | Evolution Petroleum vs. PHX Minerals | Evolution Petroleum vs. California Resources Corp |
| Southwestern Energy vs. Antero Resources Corp | Southwestern Energy vs. EQT Corporation | Southwestern Energy vs. Matador Resources | Southwestern Energy vs. Range Resources 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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