Correlation Between California Resources and EOG Resources
Can any of the company-specific risk be diversified away by investing in both California Resources 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 California Resources and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Resources Corp and EOG Resources, you can compare the effects of market volatilities on California Resources 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 California Resources with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Resources and EOG Resources.
Diversification Opportunities for California Resources and EOG Resources
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and EOG is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding California Resources Corp and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and California Resources 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 California Resources Corp 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 California Resources i.e., California Resources and EOG Resources go up and down completely randomly.
Pair Corralation between California Resources and EOG Resources
Considering the 90-day investment horizon California Resources Corp is expected to generate 2.14 times more return on investment than EOG Resources. However, California Resources is 2.14 times more volatile than EOG Resources. It trades about -0.09 of its potential returns per unit of risk. EOG Resources is currently generating about -0.2 per unit of risk. If you would invest 5,813 in California Resources Corp on September 13, 2024 and sell it today you would lose (289.00) from holding California Resources Corp or give up 4.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Resources Corp vs. EOG Resources
Performance |
| Timeline |
| California Resources Corp |
| EOG Resources |
California Resources and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Resources and EOG Resources
The main advantage of trading using opposite California Resources and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Resources 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.| California Resources vs. Berry Petroleum Corp | California Resources vs. Magnolia Oil Gas | California Resources vs. Comstock Resources | California Resources vs. Gulfport Energy Operating |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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