Correlation Between EOG Resources and Pancontinental Oil
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Pancontinental Oil 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 Pancontinental Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Pancontinental Oil Gas, you can compare the effects of market volatilities on EOG Resources and Pancontinental Oil 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 Pancontinental Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Pancontinental Oil.
Diversification Opportunities for EOG Resources and Pancontinental Oil
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between EOG and Pancontinental is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Pancontinental Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pancontinental Oil Gas 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 Pancontinental Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pancontinental Oil Gas has no effect on the direction of EOG Resources i.e., EOG Resources and Pancontinental Oil go up and down completely randomly.
Pair Corralation between EOG Resources and Pancontinental Oil
Considering the 90-day investment horizon EOG Resources is expected to generate 6.67 times less return on investment than Pancontinental Oil. But when comparing it to its historical volatility, EOG Resources is 10.01 times less risky than Pancontinental Oil. It trades about 0.2 of its potential returns per unit of risk. Pancontinental Oil Gas is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1.15 in Pancontinental Oil Gas on August 29, 2024 and sell it today you would earn a total of 0.25 from holding Pancontinental Oil Gas or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EOG Resources vs. Pancontinental Oil Gas
Performance |
| Timeline |
| EOG Resources |
| Pancontinental Oil Gas |
EOG Resources and Pancontinental Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Pancontinental Oil
The main advantage of trading using opposite EOG Resources and Pancontinental Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Pancontinental Oil 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 Pancontinental Oil will offset losses from the drop in Pancontinental Oil's long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
| Pancontinental Oil vs. Kiwetinohk Energy Corp | Pancontinental Oil vs. Melbana Energy Limited | Pancontinental Oil vs. Eco Oil Gas | Pancontinental Oil vs. Kelt Exploration |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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