Correlation Between EOG Resources and Sound Energy
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Sound 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 Sound 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 Sound Energy plc, you can compare the effects of market volatilities on EOG Resources and Sound 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 Sound Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Sound Energy.
Diversification Opportunities for EOG Resources and Sound Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EOG and Sound is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Sound Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Energy plc 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 Sound Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Energy plc has no effect on the direction of EOG Resources i.e., EOG Resources and Sound Energy go up and down completely randomly.
Pair Corralation between EOG Resources and Sound Energy
If you would invest 12,293 in EOG Resources on September 3, 2024 and sell it today you would earn a total of 1,033 from holding EOG Resources or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
EOG Resources vs. Sound Energy plc
Performance |
| Timeline |
| EOG Resources |
| Sound Energy plc |
EOG Resources and Sound Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Sound Energy
The main advantage of trading using opposite EOG Resources and Sound Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Sound 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 Sound Energy will offset losses from the drop in Sound Energy's long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Diamondback Energy |
| Sound Energy vs. CNX Resources Corp | Sound Energy vs. MV Oil Trust | Sound Energy vs. San Juan Basin | Sound Energy vs. VOC Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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