Correlation Between EOG Resources and PetroTal Corp
Can any of the company-specific risk be diversified away by investing in both EOG Resources and PetroTal Corp 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 PetroTal Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and PetroTal Corp, you can compare the effects of market volatilities on EOG Resources and PetroTal Corp 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 PetroTal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and PetroTal Corp.
Diversification Opportunities for EOG Resources and PetroTal Corp
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between EOG and PetroTal is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and PetroTal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroTal Corp 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 PetroTal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroTal Corp has no effect on the direction of EOG Resources i.e., EOG Resources and PetroTal Corp go up and down completely randomly.
Pair Corralation between EOG Resources and PetroTal Corp
Considering the 90-day investment horizon EOG Resources is expected to generate 1.35 times less return on investment than PetroTal Corp. But when comparing it to its historical volatility, EOG Resources is 1.39 times less risky than PetroTal Corp. It trades about 0.03 of its potential returns per unit of risk. PetroTal Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 36.00 in PetroTal Corp on August 30, 2024 and sell it today you would earn a total of 8.00 from holding PetroTal Corp or generate 22.22% 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. PetroTal Corp
Performance |
| Timeline |
| EOG Resources |
| PetroTal Corp |
EOG Resources and PetroTal Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and PetroTal Corp
The main advantage of trading using opposite EOG Resources and PetroTal Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, PetroTal Corp 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 PetroTal Corp will offset losses from the drop in PetroTal Corp's long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
| PetroTal Corp vs. Africa Oil Corp | PetroTal Corp vs. Athabasca Oil Corp | PetroTal Corp vs. Gear Energy | PetroTal Corp vs. Journey 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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