Correlation Between CNX Resources and Epsilon Energy
Can any of the company-specific risk be diversified away by investing in both CNX Resources 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 CNX Resources and Epsilon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNX Resources Corp and Epsilon Energy, you can compare the effects of market volatilities on CNX Resources 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 CNX Resources with a short position of Epsilon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNX Resources and Epsilon Energy.
Diversification Opportunities for CNX Resources and Epsilon Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CNX and Epsilon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding CNX Resources Corp and Epsilon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Energy and CNX 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 CNX Resources Corp 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 CNX Resources i.e., CNX Resources and Epsilon Energy go up and down completely randomly.
Pair Corralation between CNX Resources and Epsilon Energy
Considering the 90-day investment horizon CNX Resources is expected to generate 1.23 times less return on investment than Epsilon Energy. But when comparing it to its historical volatility, CNX Resources Corp is 1.1 times less risky than Epsilon Energy. It trades about 0.14 of its potential returns per unit of risk. Epsilon Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 494.00 in Epsilon Energy on February 4, 2024 and sell it today you would earn a total of 50.00 from holding Epsilon Energy or generate 10.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CNX Resources Corp vs. Epsilon Energy
Performance |
Timeline |
CNX Resources Corp |
Epsilon Energy |
CNX Resources and Epsilon Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNX Resources and Epsilon Energy
The main advantage of trading using opposite CNX Resources and Epsilon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNX Resources 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.CNX Resources vs. Vaalco Energy | CNX Resources vs. PHX Minerals | CNX Resources vs. Northern Oil Gas | CNX Resources vs. Granite Ridge Resources |
Epsilon Energy vs. Vaalco Energy | Epsilon Energy vs. PHX Minerals | Epsilon Energy vs. Northern Oil Gas | Epsilon Energy vs. Granite Ridge Resources |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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