Correlation Between EOG Resources and VOC Energy
Can any of the company-specific risk be diversified away by investing in both EOG Resources and VOC 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 VOC 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 VOC Energy Trust, you can compare the effects of market volatilities on EOG Resources and VOC 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 VOC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and VOC Energy.
Diversification Opportunities for EOG Resources and VOC Energy
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EOG and VOC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and VOC Energy Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOC Energy Trust 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 VOC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOC Energy Trust has no effect on the direction of EOG Resources i.e., EOG Resources and VOC Energy go up and down completely randomly.
Pair Corralation between EOG Resources and VOC Energy
Considering the 90-day investment horizon EOG Resources is expected to under-perform the VOC Energy. But the stock apears to be less risky and, when comparing its historical volatility, EOG Resources is 1.5 times less risky than VOC Energy. The stock trades about -0.2 of its potential returns per unit of risk. The VOC Energy Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 494.00 in VOC Energy Trust on September 13, 2024 and sell it today you would lose (3.00) from holding VOC Energy Trust or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EOG Resources vs. VOC Energy Trust
Performance |
| Timeline |
| EOG Resources |
| VOC Energy Trust |
EOG Resources and VOC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and VOC Energy
The main advantage of trading using opposite EOG Resources and VOC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, VOC 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 VOC Energy will offset losses from the drop in VOC Energy's long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Diamondback Energy |
| VOC Energy vs. Cross Timbers Royalty | VOC Energy vs. North European Oil | VOC Energy vs. Sabine Royalty Trust | VOC Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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