Correlation Between Vermilion Energy and Enerplus

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

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

Diversification Opportunities for Vermilion Energy and Enerplus

0.18

Correlation Coefficient

Vermilion Energy  Enerplus

Average diversification

The 3 months correlation between Vermilion and Enerplus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vermilion Energy and Enerplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerplus and Vermilion 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 Vermilion Energy are associated (or correlated) with Enerplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerplus has no effect on the direction of Vermilion Energy i.e., Vermilion Energy and Enerplus go up and down completely randomly.

Pair Corralation between Vermilion Energy and Enerplus

If you would invest  944.00  in Vermilion Energy on October 11, 2024 and sell it today you would earn a total of  75.00  from holding Vermilion Energy or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Vermilion Energy  vs.  Enerplus

Vermilion Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vermilion Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Vermilion Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Enerplus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enerplus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Enerplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vermilion Energy and Enerplus

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

The idea behind Vermilion Energy and Enerplus 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.