Correlation Between Black Stone and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Black Stone 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 Black Stone and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Stone Minerals and EOG Resources, you can compare the effects of market volatilities on Black Stone 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 Black Stone with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Stone and EOG Resources.
Diversification Opportunities for Black Stone and EOG Resources
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and EOG is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Black Stone Minerals and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Black Stone 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 Black Stone Minerals 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 Black Stone i.e., Black Stone and EOG Resources go up and down completely randomly.
Pair Corralation between Black Stone and EOG Resources
Considering the 90-day investment horizon Black Stone is expected to generate 5.15 times less return on investment than EOG Resources. In addition to that, Black Stone is 1.03 times more volatile than EOG Resources. It trades about 0.05 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.25 per unit of volatility. If you would invest 12,383 in EOG Resources on November 2, 2024 and sell it today you would earn a total of 640.00 from holding EOG Resources or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Stone Minerals vs. EOG Resources
Performance |
| Timeline |
| Black Stone Minerals |
| EOG Resources |
Black Stone and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Stone and EOG Resources
The main advantage of trading using opposite Black Stone and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Stone 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.| Black Stone vs. Dorchester Minerals LP | Black Stone vs. Sitio Royalties Corp | Black Stone vs. MV Oil Trust | Black Stone vs. VOC Energy Trust |
| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Diamondback Energy |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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