Correlation Between FieldPoint Petroleum and Erin Energy

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

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

Diversification Opportunities for FieldPoint Petroleum and Erin Energy

0.0

Correlation Coefficient

FieldPoint Petroleum  Erin Energy

Pay attention - limited upside

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

Pair Corralation between FieldPoint Petroleum and Erin Energy

If you would invest (100.00) in Erin Energy Corp on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Erin Energy Corp or generate -100.0% return on investment over 90 days.

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

FieldPoint Petroleum  vs.  Erin Energy Corp

FieldPoint Petroleum

Risk-Adjusted Performance

Very Weak

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

Erin Energy Corp

Risk-Adjusted Performance

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FieldPoint Petroleum and Erin Energy

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

The idea behind FieldPoint Petroleum and Erin 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.