Correlation Between Empire Petroleum and ConocoPhillips

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

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

Diversification Opportunities for Empire Petroleum and ConocoPhillips

0.0

Correlation Coefficient

Empire Petroleum  ConocoPhillips

Pay attention - limited upside

The 3 months correlation between Empire and ConocoPhillips is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Empire Petroleum 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 Empire Petroleum Corp are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and ConocoPhillips go up and down completely randomly.

Pair Corralation between Empire Petroleum and ConocoPhillips

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to under-perform the ConocoPhillips. In addition to that, Empire Petroleum is 2.2 times more volatile than ConocoPhillips. It trades about -0.03 of its total potential returns per unit of risk. ConocoPhillips is currently generating about 0.07 per unit of volatility. If you would invest  9,560  in ConocoPhillips on December 22, 2024 and sell it today you would earn a total of  632.00  from holding ConocoPhillips or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Empire Petroleum Corp  vs.  ConocoPhillips

Empire Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ConocoPhillips

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Empire Petroleum and ConocoPhillips

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

The idea behind Empire Petroleum Corp and ConocoPhillips 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.