Correlation Between Epsilon Energy and AER Energy
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and AER 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 Epsilon Energy and AER Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and AER Energy Resources, you can compare the effects of market volatilities on Epsilon Energy and AER 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 Epsilon Energy with a short position of AER Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and AER Energy.
Diversification Opportunities for Epsilon Energy and AER Energy
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Epsilon and AER is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and AER Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AER Energy Resources and Epsilon 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 Epsilon Energy are associated (or correlated) with AER Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AER Energy Resources has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and AER Energy go up and down completely randomly.
Pair Corralation between Epsilon Energy and AER Energy
Given the investment horizon of 90 days Epsilon Energy is expected to under-perform the AER Energy. But the stock apears to be less risky and, when comparing its historical volatility, Epsilon Energy is 86.53 times less risky than AER Energy. The stock trades about -0.01 of its potential returns per unit of risk. The AER Energy Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.00 in AER Energy Resources on August 30, 2024 and sell it today you would earn a total of 0.01 from holding AER Energy Resources or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Epsilon Energy vs. AER Energy Resources
Performance |
| Timeline |
| Epsilon Energy |
| AER Energy Resources |
Epsilon Energy and AER Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and AER Energy
The main advantage of trading using opposite Epsilon Energy and AER Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, AER 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 AER Energy will offset losses from the drop in AER Energy's long position.| Epsilon Energy vs. Vaalco Energy | Epsilon Energy vs. PHX Minerals | Epsilon Energy vs. Northern Oil Gas | Epsilon Energy vs. Granite Ridge Resources |
| AER Energy vs. 1847 Holdings LLC | AER Energy vs. Westport Fuel Systems | AER Energy vs. Falcons Beyond Global, | AER Energy vs. Brookfield Business Partners |
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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