Correlation Between Earthstone Energy and Callon Petroleum
Can any of the company-specific risk be diversified away by investing in both Earthstone Energy and Callon Petroleum 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 Earthstone Energy and Callon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earthstone Energy and Callon Petroleum, you can compare the effects of market volatilities on Earthstone Energy and Callon Petroleum 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 Earthstone Energy with a short position of Callon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earthstone Energy and Callon Petroleum.
Diversification Opportunities for Earthstone Energy and Callon Petroleum
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Earthstone and Callon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Earthstone Energy and Callon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callon Petroleum and Earthstone 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 Earthstone Energy are associated (or correlated) with Callon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callon Petroleum has no effect on the direction of Earthstone Energy i.e., Earthstone Energy and Callon Petroleum go up and down completely randomly.
Pair Corralation between Earthstone Energy and Callon Petroleum
If you would invest 3,553 in Callon Petroleum on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Callon Petroleum 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 |
Earthstone Energy vs. Callon Petroleum
Performance |
| Timeline |
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Callon Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Earthstone Energy and Callon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earthstone Energy and Callon Petroleum
The main advantage of trading using opposite Earthstone Energy and Callon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earthstone Energy position performs unexpectedly, Callon Petroleum 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 Callon Petroleum will offset losses from the drop in Callon Petroleum's long position.| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian Energy |
| Callon Petroleum vs. SandRidge Energy | Callon Petroleum vs. Permian Resources | Callon Petroleum vs. Matador Resources | Callon Petroleum vs. Antero Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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