Correlation Between E Split and Surge Energy

Can any of the company-specific risk be diversified away by investing in both E Split and Surge 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 E Split and Surge Energy 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 Surge Energy, you can compare the effects of market volatilities on E Split and Surge 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 E Split with a short position of Surge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Surge Energy.

Diversification Opportunities for E Split and Surge Energy

-0.48

Correlation Coefficient

E Split  Surge Energy

Very good diversification

The 3 months correlation between ENS and Surge is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Surge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Energy 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 Surge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Energy has no effect on the direction of E Split i.e., E Split and Surge Energy go up and down completely randomly.

Pair Corralation between E Split and Surge Energy

Assuming the 90 days trading horizon E Split Corp is expected to generate 0.5 times more return on investment than Surge Energy. However, E Split Corp is 2.02 times less risky than Surge Energy. It trades about 0.22 of its potential returns per unit of risk. Surge Energy is currently generating about -0.04 per unit of risk. If you would invest  1,217  in E Split Corp on September 3, 2024 and sell it today you would earn a total of  160.00  from holding E Split Corp or generate 13.15% return on investment over 90 days.

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

E Split Corp  vs.  Surge Energy

E Split Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 17 (%) 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.

Surge Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Surge Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with E Split and Surge Energy

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

The idea behind E Split Corp and Surge Energy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.