Correlation Between Earthstone Energy and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Earthstone Energy and EOG 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 Earthstone Energy and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earthstone Energy and EOG Resources, you can compare the effects of market volatilities on Earthstone Energy and EOG 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 Earthstone Energy with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earthstone Energy and EOG Resources.
Diversification Opportunities for Earthstone Energy and EOG Resources
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Earthstone and EOG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Earthstone Energy and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Earthstone Energy 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 Earthstone Energy are associated (or correlated) with EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Earthstone Energy i.e., Earthstone Energy and EOG Resources go up and down completely randomly.
Pair Corralation between Earthstone Energy and EOG Resources
If you would invest 12,207 in EOG Resources on August 28, 2024 and sell it today you would earn a total of 991.00 from holding EOG Resources or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Earthstone Energy vs. EOG Resources
Performance |
| Timeline |
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EOG Resources |
Earthstone Energy and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earthstone Energy and EOG Resources
The main advantage of trading using opposite Earthstone Energy and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earthstone Energy position performs unexpectedly, EOG 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 EOG Resources will offset losses from the drop in EOG Resources' long position.| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian Energy |
| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Marathon Oil |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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