Correlation Between PetroTal Corp and EOG Resources
Can any of the company-specific risk be diversified away by investing in both PetroTal Corp 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 PetroTal Corp and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroTal Corp and EOG Resources, you can compare the effects of market volatilities on PetroTal Corp 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 PetroTal Corp with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroTal Corp and EOG Resources.
Diversification Opportunities for PetroTal Corp and EOG Resources
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between PetroTal and EOG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PetroTal Corp and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and PetroTal Corp 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 PetroTal Corp 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 PetroTal Corp i.e., PetroTal Corp and EOG Resources go up and down completely randomly.
Pair Corralation between PetroTal Corp and EOG Resources
Assuming the 90 days horizon PetroTal Corp is expected to generate 1.39 times more return on investment than EOG Resources. However, PetroTal Corp is 1.39 times more volatile than EOG Resources. It trades about 0.03 of its potential returns per unit of risk. EOG Resources is currently generating about 0.03 per unit of risk. If you would invest 36.00 in PetroTal Corp on August 30, 2024 and sell it today you would earn a total of 8.00 from holding PetroTal Corp or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroTal Corp vs. EOG Resources
Performance |
| Timeline |
| PetroTal Corp |
| EOG Resources |
PetroTal Corp and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroTal Corp and EOG Resources
The main advantage of trading using opposite PetroTal Corp and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroTal Corp 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.| PetroTal Corp vs. Africa Oil Corp | PetroTal Corp vs. Athabasca Oil Corp | PetroTal Corp vs. Gear Energy | PetroTal Corp vs. Journey Energy |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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