Correlation Between Imperial Res and EGPI Firecreek
Can any of the company-specific risk be diversified away by investing in both Imperial Res and EGPI Firecreek 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 Imperial Res and EGPI Firecreek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Res and EGPI Firecreek, you can compare the effects of market volatilities on Imperial Res and EGPI Firecreek 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 Imperial Res with a short position of EGPI Firecreek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Res and EGPI Firecreek.
Diversification Opportunities for Imperial Res and EGPI Firecreek
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Imperial and EGPI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Res and EGPI Firecreek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGPI Firecreek and Imperial Res 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 Imperial Res are associated (or correlated) with EGPI Firecreek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGPI Firecreek has no effect on the direction of Imperial Res i.e., Imperial Res and EGPI Firecreek go up and down completely randomly.
Pair Corralation between Imperial Res and EGPI Firecreek
Given the investment horizon of 90 days Imperial Res is expected to generate 9.14 times less return on investment than EGPI Firecreek. But when comparing it to its historical volatility, Imperial Res is 5.53 times less risky than EGPI Firecreek. It trades about 0.07 of its potential returns per unit of risk. EGPI Firecreek is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.01 in EGPI Firecreek on September 2, 2024 and sell it today you would earn a total of 0.00 from holding EGPI Firecreek or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Imperial Res vs. EGPI Firecreek
Performance |
| Timeline |
| Imperial Res |
| EGPI Firecreek |
Imperial Res and EGPI Firecreek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Res and EGPI Firecreek
The main advantage of trading using opposite Imperial Res and EGPI Firecreek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Res position performs unexpectedly, EGPI Firecreek 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 EGPI Firecreek will offset losses from the drop in EGPI Firecreek's long position.| Imperial Res vs. Permian Resources | Imperial Res vs. Devon Energy | Imperial Res vs. EOG Resources | Imperial Res vs. Coterra Energy |
| EGPI Firecreek vs. Imperial Res | EGPI Firecreek vs. Strat Petroleum | EGPI Firecreek vs. Century Petroleum 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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