Correlation Between Empire Petroleum and EQT

Can any of the company-specific risk be diversified away by investing in both Empire Petroleum and EQT 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 EQT 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 EQT Corporation, you can compare the effects of market volatilities on Empire Petroleum and EQT 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 EQT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Petroleum and EQT.

Diversification Opportunities for Empire Petroleum and EQT

-0.68

Correlation Coefficient

Empire Petroleum  EQT

Excellent diversification

The 3 months correlation between Empire and EQT is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation 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 EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and EQT go up and down completely randomly.

Pair Corralation between Empire Petroleum and EQT

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to under-perform the EQT. In addition to that, Empire Petroleum is 1.48 times more volatile than EQT Corporation. It trades about -0.06 of its total potential returns per unit of risk. EQT Corporation is currently generating about 0.13 per unit of volatility. If you would invest  4,405  in EQT Corporation on December 26, 2024 and sell it today you would earn a total of  884.50  from holding EQT Corporation or generate 20.08% return on investment over 90 days.

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

Empire Petroleum Corp  vs.  EQT Corp.

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

EQT Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EQT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire Petroleum and EQT

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

The idea behind Empire Petroleum Corp and EQT Corporation 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.