Correlation Between Epsilon Energy and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Coterra 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 Coterra 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 Coterra Energy, you can compare the effects of market volatilities on Epsilon Energy and Coterra 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 Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Coterra Energy.
Diversification Opportunities for Epsilon Energy and Coterra Energy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Epsilon and Coterra is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy 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 Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Coterra Energy go up and down completely randomly.
Pair Corralation between Epsilon Energy and Coterra Energy
Given the investment horizon of 90 days Epsilon Energy is expected to under-perform the Coterra Energy. In addition to that, Epsilon Energy is 1.23 times more volatile than Coterra Energy. It trades about -0.03 of its total potential returns per unit of risk. Coterra Energy is currently generating about 0.28 per unit of volatility. If you would invest 2,357 in Coterra Energy on August 29, 2024 and sell it today you would earn a total of 311.00 from holding Coterra Energy or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Epsilon Energy vs. Coterra Energy
Performance |
| Timeline |
| Epsilon Energy |
| Coterra Energy |
Epsilon Energy and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Coterra Energy
The main advantage of trading using opposite Epsilon Energy and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Coterra 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 Coterra Energy will offset losses from the drop in Coterra 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 |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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