Correlation Between EQT and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both EQT and ConocoPhillips 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 EQT and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT Corporation and ConocoPhillips, you can compare the effects of market volatilities on EQT and ConocoPhillips 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 EQT with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT and ConocoPhillips.
Diversification Opportunities for EQT and ConocoPhillips
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EQT and ConocoPhillips is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and EQT 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 EQT Corporation are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of EQT i.e., EQT and ConocoPhillips go up and down completely randomly.
Pair Corralation between EQT and ConocoPhillips
Considering the 90-day investment horizon EQT Corporation is expected to generate 1.64 times more return on investment than ConocoPhillips. However, EQT is 1.64 times more volatile than ConocoPhillips. It trades about 0.41 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.19 per unit of risk. If you would invest 3,604 in EQT Corporation on August 24, 2024 and sell it today you would earn a total of 1,085 from holding EQT Corporation or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT Corp. vs. ConocoPhillips
Performance |
| Timeline |
| EQT Corporation |
| ConocoPhillips |
EQT and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT and ConocoPhillips
The main advantage of trading using opposite EQT and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips vs. Coterra 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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