Correlation Between EOG Resources and CNOOC
Can any of the company-specific risk be diversified away by investing in both EOG Resources and CNOOC 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 EOG Resources and CNOOC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and CNOOC, you can compare the effects of market volatilities on EOG Resources and CNOOC 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 EOG Resources with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and CNOOC.
Diversification Opportunities for EOG Resources and CNOOC
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between EOG and CNOOC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and CNOOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC and EOG 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 EOG Resources are associated (or correlated) with CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC has no effect on the direction of EOG Resources i.e., EOG Resources and CNOOC go up and down completely randomly.
Pair Corralation between EOG Resources and CNOOC
Assuming the 90 days horizon EOG Resources is expected to generate 11.97 times more return on investment than CNOOC. However, EOG Resources is 11.97 times more volatile than CNOOC. It trades about 0.01 of its potential returns per unit of risk. CNOOC is currently generating about -0.16 per unit of risk. If you would invest 11,398 in EOG Resources on September 25, 2024 and sell it today you would lose (16.00) from holding EOG Resources or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
EOG Resources vs. CNOOC
Performance |
| Timeline |
| EOG Resources |
| CNOOC |
EOG Resources and CNOOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and CNOOC
The main advantage of trading using opposite EOG Resources and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, CNOOC 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 CNOOC will offset losses from the drop in CNOOC's long position.| EOG Resources vs. Alibaba Group Holding | EOG Resources vs. ConocoPhillips | EOG Resources vs. CNOOC | EOG Resources vs. Canadian Natural Resources |
| CNOOC vs. Alibaba Group Holding | CNOOC vs. ConocoPhillips | CNOOC vs. EOG Resources | CNOOC vs. Canadian Natural Resources |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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