Correlation Between EOG Resources and Veren
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Veren 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 Veren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Veren Inc, you can compare the effects of market volatilities on EOG Resources and Veren 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 Veren. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Veren.
Diversification Opportunities for EOG Resources and Veren
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EOG and Veren is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Veren Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veren Inc 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 Veren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veren Inc has no effect on the direction of EOG Resources i.e., EOG Resources and Veren go up and down completely randomly.
Pair Corralation between EOG Resources and Veren
Considering the 90-day investment horizon EOG Resources is expected to generate 0.68 times more return on investment than Veren. However, EOG Resources is 1.48 times less risky than Veren. It trades about 0.04 of its potential returns per unit of risk. Veren Inc is currently generating about -0.01 per unit of risk. If you would invest 11,000 in EOG Resources on August 31, 2024 and sell it today you would earn a total of 2,326 from holding EOG Resources or generate 21.15% 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. Veren Inc
Performance |
| Timeline |
| EOG Resources |
| Veren Inc |
EOG Resources and Veren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Veren
The main advantage of trading using opposite EOG Resources and Veren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Veren 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 Veren will offset losses from the drop in Veren's long position.| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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