Correlation Between Epsilon Energy and Delta Oil
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Delta Oil 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 Delta Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Delta Oil Gas, you can compare the effects of market volatilities on Epsilon Energy and Delta Oil 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 Delta Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Delta Oil.
Diversification Opportunities for Epsilon Energy and Delta Oil
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Epsilon and Delta is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Delta Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Oil Gas 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 Delta Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Oil Gas has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Delta Oil go up and down completely randomly.
Pair Corralation between Epsilon Energy and Delta Oil
Given the investment horizon of 90 days Epsilon Energy is expected to generate 138.63 times less return on investment than Delta Oil. But when comparing it to its historical volatility, Epsilon Energy is 67.67 times less risky than Delta Oil. It trades about 0.06 of its potential returns per unit of risk. Delta Oil Gas is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Delta Oil Gas on September 1, 2024 and sell it today you would lose (0.02) from holding Delta Oil Gas or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.51% |
| Values | Daily Returns |
Epsilon Energy vs. Delta Oil Gas
Performance |
| Timeline |
| Epsilon Energy |
| Delta Oil Gas |
Epsilon Energy and Delta Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Delta Oil
The main advantage of trading using opposite Epsilon Energy and Delta Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Delta Oil 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 Delta Oil will offset losses from the drop in Delta Oil'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 |
| Delta Oil vs. Rave Restaurant Group | Delta Oil vs. Shake Shack | Delta Oil vs. Westrock Coffee | Delta Oil vs. The Wendys Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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