Correlation Between Eco (Atlantic) and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Eco (Atlantic) 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 Eco (Atlantic) and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Oil Gas and EOG Resources, you can compare the effects of market volatilities on Eco (Atlantic) 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 Eco (Atlantic) with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco (Atlantic) and EOG Resources.
Diversification Opportunities for Eco (Atlantic) and EOG Resources
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eco and EOG is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eco Oil Gas and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Eco (Atlantic) 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 Eco Oil Gas 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 Eco (Atlantic) i.e., Eco (Atlantic) and EOG Resources go up and down completely randomly.
Pair Corralation between Eco (Atlantic) and EOG Resources
Assuming the 90 days horizon Eco Oil Gas is expected to generate 5.46 times more return on investment than EOG Resources. However, Eco (Atlantic) is 5.46 times more volatile than EOG Resources. It trades about 0.08 of its potential returns per unit of risk. EOG Resources is currently generating about 0.27 per unit of risk. If you would invest 12.00 in Eco Oil Gas on August 26, 2024 and sell it today you would earn a total of 1.00 from holding Eco Oil Gas or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Oil Gas vs. EOG Resources
Performance |
| Timeline |
| Eco (Atlantic) |
| EOG Resources |
Eco (Atlantic) and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco (Atlantic) and EOG Resources
The main advantage of trading using opposite Eco (Atlantic) and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco (Atlantic) 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.| Eco (Atlantic) vs. CGX Energy | Eco (Atlantic) vs. Frontera Energy Corp | Eco (Atlantic) vs. Africa Energy Corp | Eco (Atlantic) vs. Africa Oil Corp |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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