Correlation Between EOG Resources and Imperial Res
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Imperial Res 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 Imperial Res into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Imperial Res, you can compare the effects of market volatilities on EOG Resources and Imperial Res 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 Imperial Res. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Imperial Res.
Diversification Opportunities for EOG Resources and Imperial Res
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EOG and Imperial is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Imperial Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Res 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 Imperial Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Res has no effect on the direction of EOG Resources i.e., EOG Resources and Imperial Res go up and down completely randomly.
Pair Corralation between EOG Resources and Imperial Res
Considering the 90-day investment horizon EOG Resources is expected to generate 114.34 times less return on investment than Imperial Res. But when comparing it to its historical volatility, EOG Resources is 38.28 times less risky than Imperial Res. It trades about 0.02 of its potential returns per unit of risk. Imperial Res is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Imperial Res on August 24, 2024 and sell it today you would lose (0.01) from holding Imperial Res or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EOG Resources vs. Imperial Res
Performance |
| Timeline |
| EOG Resources |
| Imperial Res |
EOG Resources and Imperial Res Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Imperial Res
The main advantage of trading using opposite EOG Resources and Imperial Res positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Imperial Res 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 Imperial Res will offset losses from the drop in Imperial Res' long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
| Imperial Res vs. Permian Resources | Imperial Res vs. Devon Energy | Imperial Res vs. EOG Resources | Imperial Res vs. Coterra 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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