Correlation Between EOG Resources and Melbana Energy
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Melbana Energy 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 Melbana Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Melbana Energy Limited, you can compare the effects of market volatilities on EOG Resources and Melbana Energy 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 Melbana Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Melbana Energy.
Diversification Opportunities for EOG Resources and Melbana Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EOG and Melbana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Melbana Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melbana Energy 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 Melbana Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melbana Energy has no effect on the direction of EOG Resources i.e., EOG Resources and Melbana Energy go up and down completely randomly.
Pair Corralation between EOG Resources and Melbana Energy
Considering the 90-day investment horizon EOG Resources is expected to generate 45.51 times less return on investment than Melbana Energy. But when comparing it to its historical volatility, EOG Resources is 48.85 times less risky than Melbana Energy. It trades about 0.07 of its potential returns per unit of risk. Melbana Energy Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.25 in Melbana Energy Limited on August 29, 2024 and sell it today you would earn a total of 1.75 from holding Melbana Energy Limited or generate 700.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
EOG Resources vs. Melbana Energy Limited
Performance |
| Timeline |
| EOG Resources |
| Melbana Energy |
EOG Resources and Melbana Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Melbana Energy
The main advantage of trading using opposite EOG Resources and Melbana Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Melbana Energy 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 Melbana Energy will offset losses from the drop in Melbana Energy's long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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