Correlation Between SIMPAR SA and EOG Resources
Can any of the company-specific risk be diversified away by investing in both SIMPAR SA 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 SIMPAR SA and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMPAR SA and EOG Resources, you can compare the effects of market volatilities on SIMPAR SA 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 SIMPAR SA with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMPAR SA and EOG Resources.
Diversification Opportunities for SIMPAR SA and EOG Resources
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIMPAR and EOG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and SIMPAR SA 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 SIMPAR SA 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 SIMPAR SA i.e., SIMPAR SA and EOG Resources go up and down completely randomly.
Pair Corralation between SIMPAR SA and EOG Resources
Assuming the 90 days trading horizon SIMPAR SA is expected to under-perform the EOG Resources. In addition to that, SIMPAR SA is 1.88 times more volatile than EOG Resources. It trades about -0.28 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.15 per unit of volatility. If you would invest 36,365 in EOG Resources on September 12, 2024 and sell it today you would earn a total of 2,323 from holding EOG Resources or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SIMPAR SA vs. EOG Resources
Performance |
| Timeline |
| SIMPAR SA |
| EOG Resources |
SIMPAR SA and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMPAR SA and EOG Resources
The main advantage of trading using opposite SIMPAR SA and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMPAR SA 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.| SIMPAR SA vs. Ambipar Participaes e | SIMPAR SA vs. Vamos Locao de | SIMPAR SA vs. Movida Participaes SA | SIMPAR SA vs. Petro Rio SA |
| EOG Resources vs. Petro Rio SA | EOG Resources vs. Vamos Locao de | EOG Resources vs. SIMPAR SA | EOG Resources vs. Ambipar Participaes e |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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