Correlation Between Epsilon Energy and Berry Petroleum
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Berry Petroleum 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 Berry Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Berry Petroleum Corp, you can compare the effects of market volatilities on Epsilon Energy and Berry Petroleum 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 Berry Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Berry Petroleum.
Diversification Opportunities for Epsilon Energy and Berry Petroleum
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Epsilon and Berry is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Berry Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berry Petroleum Corp 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 Berry Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berry Petroleum Corp has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Berry Petroleum go up and down completely randomly.
Pair Corralation between Epsilon Energy and Berry Petroleum
Given the investment horizon of 90 days Epsilon Energy is expected to generate 0.77 times more return on investment than Berry Petroleum. However, Epsilon Energy is 1.29 times less risky than Berry Petroleum. It trades about 0.07 of its potential returns per unit of risk. Berry Petroleum Corp is currently generating about -0.08 per unit of risk. If you would invest 485.00 in Epsilon Energy on August 27, 2024 and sell it today you would earn a total of 119.00 from holding Epsilon Energy or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Epsilon Energy vs. Berry Petroleum Corp
Performance |
| Timeline |
| Epsilon Energy |
| Berry Petroleum Corp |
Epsilon Energy and Berry Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Berry Petroleum
The main advantage of trading using opposite Epsilon Energy and Berry Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Berry Petroleum 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 Berry Petroleum will offset losses from the drop in Berry Petroleum'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 |
| Berry Petroleum vs. California Resources Corp | Berry Petroleum vs. Magnolia Oil Gas | Berry Petroleum vs. Comstock Resources | Berry Petroleum vs. Gulfport Energy Operating |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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