Correlation Between Epsilon Energy and Coastal Caribbean
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Coastal Caribbean 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 Coastal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Coastal Caribbean Oils, you can compare the effects of market volatilities on Epsilon Energy and Coastal Caribbean 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 Coastal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Coastal Caribbean.
Diversification Opportunities for Epsilon Energy and Coastal Caribbean
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Epsilon and Coastal is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Coastal Caribbean Oils in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Caribbean Oils 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 Coastal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Caribbean Oils has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Coastal Caribbean go up and down completely randomly.
Pair Corralation between Epsilon Energy and Coastal Caribbean
If you would invest 530.00 in Epsilon Energy on August 24, 2024 and sell it today you would earn a total of 72.00 from holding Epsilon Energy or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
Epsilon Energy vs. Coastal Caribbean Oils
Performance |
| Timeline |
| Epsilon Energy |
| Coastal Caribbean Oils |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Epsilon Energy and Coastal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Coastal Caribbean
The main advantage of trading using opposite Epsilon Energy and Coastal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Coastal Caribbean 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 Coastal Caribbean will offset losses from the drop in Coastal Caribbean'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 |
| Coastal Caribbean vs. Strat Petroleum | Coastal Caribbean vs. Imperial Res | Coastal Caribbean vs. Century Petroleum 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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