Correlation Between EOG Resources and North European
Can any of the company-specific risk be diversified away by investing in both EOG Resources and North European 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 North European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and North European Oil, you can compare the effects of market volatilities on EOG Resources and North European 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 North European. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and North European.
Diversification Opportunities for EOG Resources and North European
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EOG and North is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and North European Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North European Oil 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 North European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North European Oil has no effect on the direction of EOG Resources i.e., EOG Resources and North European go up and down completely randomly.
Pair Corralation between EOG Resources and North European
Considering the 90-day investment horizon EOG Resources is expected to generate 0.44 times more return on investment than North European. However, EOG Resources is 2.29 times less risky than North European. It trades about 0.0 of its potential returns per unit of risk. North European Oil is currently generating about -0.04 per unit of risk. If you would invest 11,358 in EOG Resources on January 6, 2025 and sell it today you would lose (303.00) from holding EOG Resources or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EOG Resources vs. North European Oil
Performance |
| Timeline |
| EOG Resources |
| North European Oil |
EOG Resources and North European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and North European
The main advantage of trading using opposite EOG Resources and North European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, North European 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 North European will offset losses from the drop in North European's long position.| EOG Resources vs. Hycroft Mining Holding | EOG Resources vs. GeoVax Labs | EOG Resources vs. Aquagold International | EOG Resources vs. Morningstar Unconstrained Allocation |
| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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