Correlation Between Epsilon Energy and Magnolia Oil
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Magnolia 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 Magnolia 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 Magnolia Oil Gas, you can compare the effects of market volatilities on Epsilon Energy and Magnolia 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 Magnolia Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Magnolia Oil.
Diversification Opportunities for Epsilon Energy and Magnolia Oil
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Epsilon and Magnolia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Magnolia Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnolia 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 Magnolia Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnolia Oil Gas has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Magnolia Oil go up and down completely randomly.
Pair Corralation between Epsilon Energy and Magnolia Oil
Given the investment horizon of 90 days Epsilon Energy is expected to generate 1.07 times more return on investment than Magnolia Oil. However, Epsilon Energy is 1.07 times more volatile than Magnolia Oil Gas. It trades about -0.07 of its potential returns per unit of risk. Magnolia Oil Gas is currently generating about -0.15 per unit of risk. If you would invest 636.00 in Epsilon Energy on November 9, 2024 and sell it today you would lose (18.00) from holding Epsilon Energy or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Epsilon Energy vs. Magnolia Oil Gas
Performance |
| Timeline |
| Epsilon Energy |
| Magnolia Oil Gas |
Epsilon Energy and Magnolia Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Magnolia Oil
The main advantage of trading using opposite Epsilon Energy and Magnolia Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Magnolia 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 Magnolia Oil will offset losses from the drop in Magnolia 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 |
| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |