Correlation Between Epsilon Energy and APA
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and APA 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 APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and APA Corporation, you can compare the effects of market volatilities on Epsilon Energy and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and APA.
Diversification Opportunities for Epsilon Energy and APA
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Epsilon and APA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and APA go up and down completely randomly.
Pair Corralation between Epsilon Energy and APA
Given the investment horizon of 90 days Epsilon Energy is expected to generate 0.8 times more return on investment than APA. However, Epsilon Energy is 1.24 times less risky than APA. It trades about 0.06 of its potential returns per unit of risk. APA Corporation is currently generating about -0.02 per unit of risk. If you would invest 567.00 in Epsilon Energy on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Epsilon Energy or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Epsilon Energy vs. APA Corp.
Performance |
| Timeline |
| Epsilon Energy |
| APA Corporation |
Epsilon Energy and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and APA
The main advantage of trading using opposite Epsilon Energy and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, APA 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 APA will offset losses from the drop in APA'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 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |