Correlation Between Epsilon Energy and Delek Energy
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Delek 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 Delek 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 Delek Energy, you can compare the effects of market volatilities on Epsilon Energy and Delek 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 Delek Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Delek Energy.
Diversification Opportunities for Epsilon Energy and Delek Energy
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Epsilon and Delek is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek 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 Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Delek Energy go up and down completely randomly.
Pair Corralation between Epsilon Energy and Delek Energy
Given the investment horizon of 90 days Epsilon Energy is expected to generate 3.07 times less return on investment than Delek Energy. But when comparing it to its historical volatility, Epsilon Energy is 1.15 times less risky than Delek Energy. It trades about 0.05 of its potential returns per unit of risk. Delek Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,689 in Delek Energy on August 23, 2024 and sell it today you would earn a total of 150.00 from holding Delek Energy or generate 8.88% 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. Delek Energy
Performance |
| Timeline |
| Epsilon Energy |
| Delek Energy |
Epsilon Energy and Delek Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Delek Energy
The main advantage of trading using opposite Epsilon Energy and Delek Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Delek 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 Delek Energy will offset losses from the drop in Delek 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 |
| Delek Energy vs. Crossamerica Partners LP | Delek Energy vs. Sunoco LP | Delek Energy vs. CVR Energy | Delek Energy vs. Phillips 66 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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