Correlation Between E Split and Pulse Oil

Can any of the company-specific risk be diversified away by investing in both E Split and Pulse Oil 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 E Split and Pulse Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E Split Corp and Pulse Oil Corp, you can compare the effects of market volatilities on E Split and Pulse Oil 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 E Split with a short position of Pulse Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Pulse Oil.

Diversification Opportunities for E Split and Pulse Oil

-0.72

Correlation Coefficient

E Split  Pulse Oil

Pay attention - limited upside

The 3 months correlation between ENS and Pulse is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Pulse Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulse Oil Corp and E Split 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 E Split Corp are associated (or correlated) with Pulse Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulse Oil Corp has no effect on the direction of E Split i.e., E Split and Pulse Oil go up and down completely randomly.

Pair Corralation between E Split and Pulse Oil

Assuming the 90 days trading horizon E Split is expected to generate 2.51 times less return on investment than Pulse Oil. But when comparing it to its historical volatility, E Split Corp is 16.92 times less risky than Pulse Oil. It trades about 0.13 of its potential returns per unit of risk. Pulse Oil Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Pulse Oil Corp on September 26, 2024 and sell it today you would lose (0.50) from holding Pulse Oil Corp or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

E Split Corp  vs.  Pulse Oil Corp

E Split Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, E Split may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pulse Oil Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pulse Oil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pulse Oil showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E Split and Pulse Oil

The main advantage of trading using opposite E Split and Pulse Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split position performs unexpectedly, Pulse Oil 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 Pulse Oil will offset losses from the drop in Pulse Oil's long position.

The idea behind E Split Corp and Pulse Oil Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.