Correlation Between Woodside Energy and Epsilon Energy
Can any of the company-specific risk be diversified away by investing in both Woodside Energy 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 Woodside Energy and Epsilon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodside Energy Group and Epsilon Energy, you can compare the effects of market volatilities on Woodside Energy 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 Woodside Energy with a short position of Epsilon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and Epsilon Energy.
Diversification Opportunities for Woodside Energy and Epsilon Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Woodside and Epsilon is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and Epsilon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Energy and Woodside 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 Woodside Energy Group 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 Woodside Energy i.e., Woodside Energy and Epsilon Energy go up and down completely randomly.
Pair Corralation between Woodside Energy and Epsilon Energy
Considering the 90-day investment horizon Woodside Energy Group is expected to under-perform the Epsilon Energy. But the stock apears to be less risky and, when comparing its historical volatility, Woodside Energy Group is 1.12 times less risky than Epsilon Energy. The stock trades about -0.02 of its potential returns per unit of risk. The Epsilon Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 517.00 in Epsilon Energy on September 3, 2024 and sell it today you would earn a total of 61.00 from holding Epsilon Energy or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodside Energy Group vs. Epsilon Energy
Performance |
| Timeline |
| Woodside Energy Group |
| Epsilon Energy |
Woodside Energy and Epsilon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and Epsilon Energy
The main advantage of trading using opposite Woodside Energy and Epsilon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Energy 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.| Woodside Energy vs. EOG Resources | Woodside Energy vs. APA Corporation | Woodside Energy vs. Range Resources Corp | Woodside Energy vs. Diamondback Energy |
| Epsilon Energy vs. Granite Ridge Resources | Epsilon Energy vs. North European Oil | Epsilon Energy vs. CNX Resources Corp | Epsilon Energy vs. GeoPark |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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