Correlation Between Nationwide Utilities and Evolution Petroleum

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

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

Diversification Opportunities for Nationwide Utilities and Evolution Petroleum

0.0

Correlation Coefficient

Nationwide Utilities  Evolution Petroleum

Pay attention - limited upside

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

Pair Corralation between Nationwide Utilities and Evolution Petroleum

If you would invest  586.00  in Evolution Petroleum on September 5, 2024 and sell it today you would lose (1.00) from holding Evolution Petroleum or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nationwide Utilities  vs.  Evolution Petroleum

Nationwide Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Evolution Petroleum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Petroleum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Evolution Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nationwide Utilities and Evolution Petroleum

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

The idea behind Nationwide Utilities and Evolution Petroleum 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.