Correlation Between EOG Resources and Petrus Resources
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Petrus Resources 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 Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Petrus Resources, you can compare the effects of market volatilities on EOG Resources and Petrus Resources 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 Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Petrus Resources.
Diversification Opportunities for EOG Resources and Petrus Resources
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EOG and Petrus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources 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 Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of EOG Resources i.e., EOG Resources and Petrus Resources go up and down completely randomly.
Pair Corralation between EOG Resources and Petrus Resources
Considering the 90-day investment horizon EOG Resources is expected to generate 1.13 times less return on investment than Petrus Resources. But when comparing it to its historical volatility, EOG Resources is 1.55 times less risky than Petrus Resources. It trades about 0.07 of its potential returns per unit of risk. Petrus Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Petrus Resources on September 3, 2024 and sell it today you would earn a total of 11.00 from holding Petrus Resources or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
EOG Resources vs. Petrus Resources
Performance |
| Timeline |
| EOG Resources |
| Petrus Resources |
EOG Resources and Petrus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Petrus Resources
The main advantage of trading using opposite EOG Resources and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Petrus Resources 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Diamondback Energy |
| Petrus Resources vs. FAR Limited | Petrus Resources vs. Valeura Energy | Petrus Resources vs. Epsilon Energy | Petrus Resources vs. PetroShale |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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