Correlation Between Epsilon Energy and CNX Resources
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and CNX Resources 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 CNX Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and CNX Resources Corp, you can compare the effects of market volatilities on Epsilon Energy and CNX Resources 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 CNX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and CNX Resources.
Diversification Opportunities for Epsilon Energy and CNX Resources
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Epsilon and CNX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources 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 CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and CNX Resources go up and down completely randomly.
Pair Corralation between Epsilon Energy and CNX Resources
Given the investment horizon of 90 days Epsilon Energy is expected to generate 3.41 times less return on investment than CNX Resources. In addition to that, Epsilon Energy is 1.02 times more volatile than CNX Resources Corp. It trades about 0.05 of its total potential returns per unit of risk. CNX Resources Corp is currently generating about 0.18 per unit of volatility. If you would invest 2,613 in CNX Resources Corp on August 30, 2024 and sell it today you would earn a total of 1,421 from holding CNX Resources Corp or generate 54.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Epsilon Energy vs. CNX Resources Corp
Performance |
| Timeline |
| Epsilon Energy |
| CNX Resources Corp |
Epsilon Energy and CNX Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and CNX Resources
The main advantage of trading using opposite Epsilon Energy and CNX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, CNX Resources 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 CNX Resources will offset losses from the drop in CNX Resources' long position.| Epsilon Energy vs. Vaalco Energy | Epsilon Energy vs. PHX Minerals | Epsilon Energy vs. Northern Oil Gas | Epsilon Energy vs. Granite Ridge Resources |
| CNX Resources vs. Epsilon Energy | CNX Resources vs. Gulfport Energy Operating | CNX Resources vs. GeoPark | CNX Resources vs. MV Oil Trust |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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