Correlation Between EQT and California Resources
Can any of the company-specific risk be diversified away by investing in both EQT and California 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 EQT and California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT Corporation and California Resources Corp, you can compare the effects of market volatilities on EQT and California 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 EQT with a short position of California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT and California Resources.
Diversification Opportunities for EQT and California Resources
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EQT and California is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and California Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources Corp 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 California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources Corp has no effect on the direction of EQT i.e., EQT and California Resources go up and down completely randomly.
Pair Corralation between EQT and California Resources
Considering the 90-day investment horizon EQT Corporation is expected to generate 1.39 times more return on investment than California Resources. However, EQT is 1.39 times more volatile than California Resources Corp. It trades about 0.4 of its potential returns per unit of risk. California Resources Corp is currently generating about 0.32 per unit of risk. If you would invest 3,638 in EQT Corporation on September 1, 2024 and sell it today you would earn a total of 906.00 from holding EQT Corporation or generate 24.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT Corp. vs. California Resources Corp
Performance |
| Timeline |
| EQT Corporation |
| California Resources Corp |
EQT and California Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT and California Resources
The main advantage of trading using opposite EQT and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT position performs unexpectedly, California 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 California Resources will offset losses from the drop in California Resources' long position.| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
| California Resources vs. Berry Petroleum Corp | California Resources vs. Magnolia Oil Gas | California Resources vs. Comstock Resources | California Resources vs. Gulfport Energy Operating |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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