Correlation Between Suntory Beverage and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and EOG Resources 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 Suntory Beverage and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntory Beverage Food and EOG Resources, you can compare the effects of market volatilities on Suntory Beverage and EOG Resources 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 Suntory Beverage with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and EOG Resources.
Diversification Opportunities for Suntory Beverage and EOG Resources
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Suntory and EOG is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Suntory Beverage 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 Suntory Beverage Food are associated (or correlated) with EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and EOG Resources go up and down completely randomly.
Pair Corralation between Suntory Beverage and EOG Resources
Assuming the 90 days horizon Suntory Beverage is expected to generate 5.55 times less return on investment than EOG Resources. But when comparing it to its historical volatility, Suntory Beverage Food is 1.11 times less risky than EOG Resources. It trades about 0.06 of its potential returns per unit of risk. EOG Resources is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 11,082 in EOG Resources on August 31, 2024 and sell it today you would earn a total of 1,508 from holding EOG Resources or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suntory Beverage Food vs. EOG Resources
Performance |
| Timeline |
| Suntory Beverage Food |
| EOG Resources |
Suntory Beverage and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntory Beverage and EOG Resources
The main advantage of trading using opposite Suntory Beverage and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage position performs unexpectedly, EOG Resources 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 EOG Resources will offset losses from the drop in EOG Resources' long position.| Suntory Beverage vs. Heineken Holding NV | Suntory Beverage vs. Superior Plus Corp | Suntory Beverage vs. NMI Holdings | Suntory Beverage vs. Origin Agritech |
| EOG Resources vs. China Communications Services | EOG Resources vs. Gamma Communications plc | EOG Resources vs. Corporate Travel Management | EOG Resources vs. Iridium Communications |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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