Correlation Between Granite Ridge and Epsilon Energy
Can any of the company-specific risk be diversified away by investing in both Granite Ridge and Epsilon 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 Granite Ridge and Epsilon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Ridge Resources and Epsilon Energy, you can compare the effects of market volatilities on Granite Ridge and Epsilon 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 Granite Ridge with a short position of Epsilon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Epsilon Energy.
Diversification Opportunities for Granite Ridge and Epsilon Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and Epsilon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Epsilon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Energy and Granite Ridge 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 Granite Ridge Resources are associated (or correlated) with Epsilon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epsilon Energy has no effect on the direction of Granite Ridge i.e., Granite Ridge and Epsilon Energy go up and down completely randomly.
Pair Corralation between Granite Ridge and Epsilon Energy
Given the investment horizon of 90 days Granite Ridge is expected to generate 1.02 times less return on investment than Epsilon Energy. In addition to that, Granite Ridge is 1.51 times more volatile than Epsilon Energy. It trades about 0.02 of its total potential returns per unit of risk. Epsilon Energy is currently generating about 0.03 per unit of volatility. If you would invest 532.00 in Epsilon Energy on October 20, 2024 and sell it today you would earn a total of 129.00 from holding Epsilon Energy or generate 24.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Granite Ridge Resources vs. Epsilon Energy
Performance |
Timeline |
Granite Ridge Resources |
Epsilon Energy |
Granite Ridge and Epsilon Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Granite Ridge and Epsilon Energy
The main advantage of trading using opposite Granite Ridge and Epsilon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge position performs unexpectedly, Epsilon 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 Epsilon Energy will offset losses from the drop in Epsilon Energy's long position.Granite Ridge vs. Epsilon Energy | Granite Ridge vs. Gulfport Energy Operating | Granite Ridge vs. North European Oil | Granite Ridge vs. PHX Minerals |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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