Correlation Between Epsilon Energy and Petrus Resources
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Petrus Resources 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 Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Petrus Resources, you can compare the effects of market volatilities on Epsilon Energy and Petrus Resources 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 Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Petrus Resources.
Diversification Opportunities for Epsilon Energy and Petrus Resources
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Epsilon and Petrus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources 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 Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Petrus Resources go up and down completely randomly.
Pair Corralation between Epsilon Energy and Petrus Resources
Given the investment horizon of 90 days Epsilon Energy is expected to under-perform the Petrus Resources. In addition to that, Epsilon Energy is 1.98 times more volatile than Petrus Resources. It trades about -0.01 of its total potential returns per unit of risk. Petrus Resources is currently generating about 0.01 per unit of volatility. If you would invest 103.00 in Petrus Resources on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Petrus Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Epsilon Energy vs. Petrus Resources
Performance |
| Timeline |
| Epsilon Energy |
| Petrus Resources |
Epsilon Energy and Petrus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Petrus Resources
The main advantage of trading using opposite Epsilon Energy and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Petrus Resources 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.| Epsilon Energy vs. Vaalco Energy | Epsilon Energy vs. PHX Minerals | Epsilon Energy vs. Northern Oil Gas | Epsilon Energy vs. Granite Ridge Resources |
| Petrus Resources vs. FAR Limited | Petrus Resources vs. Valeura Energy | Petrus Resources vs. Epsilon Energy | Petrus Resources vs. PetroShale |
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.
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