Correlation Between PetroShale and EOG Resources
Can any of the company-specific risk be diversified away by investing in both PetroShale 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 PetroShale and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and EOG Resources, you can compare the effects of market volatilities on PetroShale 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 PetroShale with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and EOG Resources.
Diversification Opportunities for PetroShale and EOG Resources
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroShale and EOG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and PetroShale 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 PetroShale 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 PetroShale i.e., PetroShale and EOG Resources go up and down completely randomly.
Pair Corralation between PetroShale and EOG Resources
Assuming the 90 days horizon PetroShale is expected to under-perform the EOG Resources. In addition to that, PetroShale is 1.54 times more volatile than EOG Resources. It trades about -0.15 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.07 per unit of volatility. If you would invest 11,862 in EOG Resources on September 3, 2024 and sell it today you would earn a total of 1,464 from holding EOG Resources or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroShale vs. EOG Resources
Performance |
| Timeline |
| PetroShale |
| EOG Resources |
PetroShale and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and EOG Resources
The main advantage of trading using opposite PetroShale and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale 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.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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