Correlation Between Energy Resources and EP Financial
Can any of the company-specific risk be diversified away by investing in both Energy Resources and EP Financial 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 Energy Resources and EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Resources and EP Financial Group, you can compare the effects of market volatilities on Energy Resources and EP Financial 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 Energy Resources with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Resources and EP Financial.
Diversification Opportunities for Energy Resources and EP Financial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and EP1 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Energy Resources 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 Energy Resources are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Energy Resources i.e., Energy Resources and EP Financial go up and down completely randomly.
Pair Corralation between Energy Resources and EP Financial
Assuming the 90 days trading horizon Energy Resources is expected to generate 4.17 times more return on investment than EP Financial. However, Energy Resources is 4.17 times more volatile than EP Financial Group. It trades about 0.02 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.03 per unit of risk. If you would invest 3.10 in Energy Resources on August 31, 2024 and sell it today you would lose (2.90) from holding Energy Resources or give up 93.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Resources vs. EP Financial Group
Performance |
| Timeline |
| Energy Resources |
| EP Financial Group |
Energy Resources and EP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Resources and EP Financial
The main advantage of trading using opposite Energy Resources and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Resources position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.| Energy Resources vs. AiMedia Technologies | Energy Resources vs. Infomedia | Energy Resources vs. Argo Investments | Energy Resources vs. Collins Foods |
| EP Financial vs. Energy Resources | EP Financial vs. 88 Energy | EP Financial vs. Amani Gold | EP Financial vs. A1 Investments 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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