Correlation Between EQT and PetroShale
Can any of the company-specific risk be diversified away by investing in both EQT and PetroShale 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 PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT Corporation and PetroShale, you can compare the effects of market volatilities on EQT and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT and PetroShale.
Diversification Opportunities for EQT and PetroShale
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EQT and PetroShale is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of EQT i.e., EQT and PetroShale go up and down completely randomly.
Pair Corralation between EQT and PetroShale
Considering the 90-day investment horizon EQT Corporation is expected to generate 1.88 times more return on investment than PetroShale. However, EQT is 1.88 times more volatile than PetroShale. It trades about 0.4 of its potential returns per unit of risk. PetroShale is currently generating about -0.21 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT Corp. vs. PetroShale
Performance |
| Timeline |
| EQT Corporation |
| PetroShale |
EQT and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT and PetroShale
The main advantage of trading using opposite EQT and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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