Correlation Between Epsilon Energy and Ashford

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

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

Diversification Opportunities for Epsilon Energy and Ashford

0.27

Correlation Coefficient

Epsilon Energy  Ashford

Modest diversification

The 3 months correlation between Epsilon and Ashford is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Energy and Ashford in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford and Epsilon Energy 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 Epsilon Energy are associated (or correlated) with Ashford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford has no effect on the direction of Epsilon Energy i.e., Epsilon Energy and Ashford go up and down completely randomly.

Pair Corralation between Epsilon Energy and Ashford

If you would invest  510.00  in Epsilon Energy on September 4, 2024 and sell it today you would earn a total of  49.00  from holding Epsilon Energy or generate 9.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Epsilon Energy  vs.  Ashford

Epsilon Energy

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Epsilon Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Epsilon Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ashford

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashford has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ashford is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Epsilon Energy and Ashford

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

The idea behind Epsilon Energy and Ashford 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..