Correlation Between Obsidian Energy and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Obsidian 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 Obsidian 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 Obsidian Energy and EOG Resources, you can compare the effects of market volatilities on Obsidian 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 Obsidian Energy with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obsidian Energy and EOG Resources.
Diversification Opportunities for Obsidian Energy and EOG Resources
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Obsidian and EOG is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Obsidian Energy and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Obsidian 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 Obsidian 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 Obsidian Energy i.e., Obsidian Energy and EOG Resources go up and down completely randomly.
Pair Corralation between Obsidian Energy and EOG Resources
Considering the 90-day investment horizon Obsidian Energy is expected to generate 1.94 times more return on investment than EOG Resources. However, Obsidian Energy is 1.94 times more volatile than EOG Resources. It trades about -0.09 of its potential returns per unit of risk. EOG Resources is currently generating about -0.19 per unit of risk. If you would invest 563.00 in Obsidian Energy on November 18, 2024 and sell it today you would lose (30.00) from holding Obsidian Energy or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Obsidian Energy vs. EOG Resources
Performance |
| Timeline |
| Obsidian Energy |
| EOG Resources |
Obsidian Energy and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Obsidian Energy and EOG Resources
The main advantage of trading using opposite Obsidian Energy and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obsidian 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.| Obsidian Energy vs. Baytex Energy Corp | Obsidian Energy vs. Vermilion Energy | Obsidian Energy vs. Canadian Natural Resources | Obsidian Energy vs. Ovintiv |
| EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy | EOG Resources vs. Diamondback 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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