Correlation Between Permian Resources and Enwell Energy
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Enwell 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 Permian Resources and Enwell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Enwell Energy plc, you can compare the effects of market volatilities on Permian Resources and Enwell 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 Permian Resources with a short position of Enwell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Enwell Energy.
Diversification Opportunities for Permian Resources and Enwell Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Permian and Enwell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Enwell Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enwell Energy plc and Permian Resources 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 Permian Resources are associated (or correlated) with Enwell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enwell Energy plc has no effect on the direction of Permian Resources i.e., Permian Resources and Enwell Energy go up and down completely randomly.
Pair Corralation between Permian Resources and Enwell Energy
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 3.85 times less return on investment than Enwell Energy. But when comparing it to its historical volatility, Permian Resources is 5.9 times less risky than Enwell Energy. It trades about 0.07 of its potential returns per unit of risk. Enwell Energy plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Enwell Energy plc on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Enwell Energy plc or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Permian Resources vs. Enwell Energy plc
Performance |
| Timeline |
| Permian Resources |
| Enwell Energy plc |
Permian Resources and Enwell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and Enwell Energy
The main advantage of trading using opposite Permian Resources and Enwell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Enwell 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 Enwell Energy will offset losses from the drop in Enwell Energy's long position.| Permian Resources vs. ConocoPhillips | Permian Resources vs. Occidental Petroleum | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy |
| Enwell Energy vs. Cadence Design Systems | Enwell Energy vs. BJs Restaurants | Enwell Energy vs. Dennys Corp | Enwell Energy vs. Summit Hotel Properties |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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