Correlation Between Empire Petroleum and Carbon Energy

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

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

Diversification Opportunities for Empire Petroleum and Carbon Energy

-0.64

Correlation Coefficient

Empire Petroleum  Carbon Energy

Excellent diversification

The 3 months correlation between Empire and Carbon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and Carbon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Energy and Empire 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 Empire Petroleum Corp are associated (or correlated) with Carbon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Energy has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and Carbon Energy go up and down completely randomly.

Pair Corralation between Empire Petroleum and Carbon Energy

If you would invest  13.00  in Carbon Energy on February 6, 2024 and sell it today you would earn a total of  0.00  from holding Carbon Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.57%
Values	Daily Returns

Empire Petroleum Corp  vs.  Carbon Energy

Empire Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carbon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carbon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Carbon Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Empire Petroleum and Carbon Energy

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

The idea behind Empire Petroleum Corp and Carbon Energy 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.