Correlation Between Evolution Petroleum and Calumet Specialty

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

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

Diversification Opportunities for Evolution Petroleum and Calumet Specialty

0.36

Correlation Coefficient

Evolution Petroleum  Calumet Specialty

Weak diversification

The 3 months correlation between Evolution and Calumet is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Petroleum and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty and Evolution 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 Evolution Petroleum are associated (or correlated) with Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Evolution Petroleum i.e., Evolution Petroleum and Calumet Specialty go up and down completely randomly.

Pair Corralation between Evolution Petroleum and Calumet Specialty

Considering the 90-day investment horizon Evolution Petroleum is expected to generate 0.29 times more return on investment than Calumet Specialty. However, Evolution Petroleum is 3.42 times less risky than Calumet Specialty. It trades about 0.03 of its potential returns per unit of risk. Calumet Specialty Products is currently generating about -0.14 per unit of risk. If you would invest  500.00  in Evolution Petroleum on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Evolution Petroleum or generate 2.4% return on investment over 90 days.

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

Evolution Petroleum  vs.  Calumet Specialty Products

Evolution Petroleum

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Petroleum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Evolution Petroleum is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Calumet Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calumet Specialty Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Evolution Petroleum and Calumet Specialty

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

The idea behind Evolution Petroleum and Calumet Specialty Products 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.