Correlation Between Earthstone Energy and Permian Resources
Can any of the company-specific risk be diversified away by investing in both Earthstone Energy and Permian 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 Earthstone Energy and Permian Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earthstone Energy and Permian Resources, you can compare the effects of market volatilities on Earthstone Energy and Permian 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 Earthstone Energy with a short position of Permian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earthstone Energy and Permian Resources.
Diversification Opportunities for Earthstone Energy and Permian Resources
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Earthstone and Permian is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Earthstone Energy and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources 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 Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Earthstone Energy i.e., Earthstone Energy and Permian Resources go up and down completely randomly.
Pair Corralation between Earthstone Energy and Permian Resources
If you would invest 1,348 in Permian Resources on August 28, 2024 and sell it today you would earn a total of 220.00 from holding Permian Resources or generate 16.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Earthstone Energy vs. Permian Resources
Performance |
| Timeline |
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Permian Resources |
Earthstone Energy and Permian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earthstone Energy and Permian Resources
The main advantage of trading using opposite Earthstone Energy and Permian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earthstone Energy position performs unexpectedly, Permian 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 Permian Resources will offset losses from the drop in Permian Resources' long position.| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian Energy |
| Permian Resources vs. ConocoPhillips | Permian Resources vs. Occidental Petroleum | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets |