Correlation Between Erin Energy and GulfSlope Energy

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Can any of the company-specific risk be diversified away by investing in both Erin Energy and GulfSlope Energy 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 Erin Energy and GulfSlope Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erin Energy Corp and GulfSlope Energy, you can compare the effects of market volatilities on Erin Energy and GulfSlope Energy 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 Erin Energy with a short position of GulfSlope Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erin Energy and GulfSlope Energy.

Diversification Opportunities for Erin Energy and GulfSlope Energy

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Erin and GulfSlope is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Erin Energy Corp and GulfSlope Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GulfSlope Energy and Erin 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 Erin Energy Corp are associated (or correlated) with GulfSlope Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GulfSlope Energy has no effect on the direction of Erin Energy i.e., Erin Energy and GulfSlope Energy go up and down completely randomly.

Pair Corralation between Erin Energy and GulfSlope Energy

If you would invest  0.10  in GulfSlope Energy on August 27, 2024 and sell it today you would lose (0.09) from holding GulfSlope Energy or give up 90.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.53%
ValuesDaily Returns

Erin Energy Corp  vs.  GulfSlope Energy

 Performance 
       Timeline  
Erin Energy Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Erin Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Erin Energy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
GulfSlope Energy 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GulfSlope Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GulfSlope Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Erin Energy and GulfSlope Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Erin Energy and GulfSlope Energy

The main advantage of trading using opposite Erin Energy and GulfSlope Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erin Energy position performs unexpectedly, GulfSlope Energy 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 GulfSlope Energy will offset losses from the drop in GulfSlope Energy's long position.
The idea behind Erin Energy Corp and GulfSlope Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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