Correlation Between Epsilon Energy and Pine Cliff
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Pine Cliff 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 Pine Cliff into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Pine Cliff Energy, you can compare the effects of market volatilities on Epsilon Energy and Pine Cliff 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 Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Pine Cliff.
Diversification Opportunities for Epsilon Energy and Pine Cliff
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Epsilon and Pine is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff 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 Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Pine Cliff go up and down completely randomly.
Pair Corralation between Epsilon Energy and Pine Cliff
Given the investment horizon of 90 days Epsilon Energy is expected to generate 0.71 times more return on investment than Pine Cliff. However, Epsilon Energy is 1.4 times less risky than Pine Cliff. It trades about 0.05 of its potential returns per unit of risk. Pine Cliff Energy is currently generating about -0.05 per unit of risk. If you would invest 507.00 in Epsilon Energy on August 26, 2024 and sell it today you would earn a total of 97.00 from holding Epsilon Energy or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Epsilon Energy vs. Pine Cliff Energy
Performance |
| Timeline |
| Epsilon Energy |
| Pine Cliff Energy |
Epsilon Energy and Pine Cliff Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Pine Cliff
The main advantage of trading using opposite Epsilon Energy and Pine Cliff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Pine Cliff 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 Pine Cliff will offset losses from the drop in Pine Cliff'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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