Correlation Between Erin Energy and Holloman Energy

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

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

Diversification Opportunities for Erin Energy and Holloman Energy

1.0

Correlation Coefficient

Erin Energy  Holloman Energy

No risk reduction

The 3 months correlation between Erin and Holloman is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Erin Energy Corp and Holloman Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holloman Energy Corp and Erin 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 Erin Energy Corp are associated (or correlated) with Holloman Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holloman Energy Corp has no effect on the direction of Erin Energy i.e., Erin Energy and Holloman Energy go up and down completely randomly.

Pair Corralation between Erin Energy and Holloman Energy

If you would invest  0.01  in Erin Energy Corp on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Erin Energy Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.59%
Values	Daily Returns

Erin Energy Corp  vs.  Holloman Energy Corp

Erin Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erin Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Erin Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Holloman Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holloman Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Erin Energy and Holloman Energy

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

The idea behind Erin Energy Corp and Holloman Energy Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..