Correlation Between Epsilon Energy and Evolution Petroleum
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Evolution Petroleum 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 Evolution Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Evolution Petroleum, you can compare the effects of market volatilities on Epsilon Energy and Evolution Petroleum 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 Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Evolution Petroleum.
Diversification Opportunities for Epsilon Energy and Evolution Petroleum
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Epsilon and Evolution is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum 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 Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Evolution Petroleum go up and down completely randomly.
Pair Corralation between Epsilon Energy and Evolution Petroleum
Given the investment horizon of 90 days Epsilon Energy is expected to generate 2.63 times less return on investment than Evolution Petroleum. But when comparing it to its historical volatility, Epsilon Energy is 1.38 times less risky than Evolution Petroleum. It trades about 0.01 of its potential returns per unit of risk. Evolution Petroleum is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 579.00 in Evolution Petroleum on August 27, 2024 and sell it today you would earn a total of 31.00 from holding Evolution Petroleum or generate 5.35% 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. Evolution Petroleum
Performance |
| Timeline |
| Epsilon Energy |
| Evolution Petroleum |
Epsilon Energy and Evolution Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Evolution Petroleum
The main advantage of trading using opposite Epsilon Energy and Evolution Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Evolution Petroleum 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 Evolution Petroleum will offset losses from the drop in Evolution Petroleum'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 |
| Evolution Petroleum vs. Devon Energy | Evolution Petroleum vs. ConocoPhillips | Evolution Petroleum vs. Occidental Petroleum | Evolution Petroleum vs. Permian Resources |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |