Correlation Between Barnwell Industries and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Barnwell Industries 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 Barnwell Industries and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnwell Industries and EOG Resources, you can compare the effects of market volatilities on Barnwell Industries 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 Barnwell Industries with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and EOG Resources.
Diversification Opportunities for Barnwell Industries and EOG Resources
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barnwell and EOG is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Barnwell Industries 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 Barnwell Industries 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 Barnwell Industries i.e., Barnwell Industries and EOG Resources go up and down completely randomly.
Pair Corralation between Barnwell Industries and EOG Resources
Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the EOG Resources. In addition to that, Barnwell Industries is 1.39 times more volatile than EOG Resources. It trades about -0.2 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.04 per unit of volatility. If you would invest 12,905 in EOG Resources on August 29, 2024 and sell it today you would earn a total of 404.00 from holding EOG Resources or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnwell Industries vs. EOG Resources
Performance |
| Timeline |
| Barnwell Industries |
| EOG Resources |
Barnwell Industries and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnwell Industries and EOG Resources
The main advantage of trading using opposite Barnwell Industries and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries 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.| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring Energy |
| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
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 Stocks Directory module to find actively traded stocks across global markets.
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