Correlation Between Epsilon Energy and Tellurian
Can any of the company-specific risk be diversified away by investing in both Epsilon Energy and Tellurian 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 Tellurian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Epsilon Energy and Tellurian, you can compare the effects of market volatilities on Epsilon Energy and Tellurian 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 Tellurian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Energy and Tellurian.
Diversification Opportunities for Epsilon Energy and Tellurian
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Epsilon and Tellurian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Tellurian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tellurian 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 Tellurian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tellurian has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Tellurian go up and down completely randomly.
Pair Corralation between Epsilon Energy and Tellurian
Given the investment horizon of 90 days Epsilon Energy is expected to generate 6.75 times less return on investment than Tellurian. But when comparing it to its historical volatility, Epsilon Energy is 5.01 times less risky than Tellurian. It trades about 0.05 of its potential returns per unit of risk. Tellurian is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Tellurian on August 26, 2024 and sell it today you would earn a total of 39.00 from holding Tellurian or generate 63.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.75% |
| Values | Daily Returns |
Epsilon Energy vs. Tellurian
Performance |
| Timeline |
| Epsilon Energy |
| Tellurian |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Epsilon Energy and Tellurian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Epsilon Energy and Tellurian
The main advantage of trading using opposite Epsilon Energy and Tellurian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epsilon Energy position performs unexpectedly, Tellurian 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 Tellurian will offset losses from the drop in Tellurian'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 |
| Tellurian vs. Epsilon Energy | Tellurian vs. GeoPark | Tellurian vs. Kosmos Energy | Tellurian vs. PEDEVCO Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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