Correlation Between Vital Energy and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Vital 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 Vital 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 Vital Energy and EOG Resources, you can compare the effects of market volatilities on Vital 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 Vital Energy with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Energy and EOG Resources.
Diversification Opportunities for Vital Energy and EOG Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vital and EOG is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Vital 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 Vital 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 Vital Energy i.e., Vital Energy and EOG Resources go up and down completely randomly.
Pair Corralation between Vital Energy and EOG Resources
Given the investment horizon of 90 days Vital Energy is expected to under-perform the EOG Resources. In addition to that, Vital Energy is 1.82 times more volatile than EOG Resources. It trades about -0.04 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.04 per unit of volatility. If you would invest 11,862 in EOG Resources on August 24, 2024 and sell it today you would earn a total of 1,688 from holding EOG Resources or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vital Energy vs. EOG Resources
Performance |
| Timeline |
| Vital Energy |
| EOG Resources |
Vital Energy and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vital Energy and EOG Resources
The main advantage of trading using opposite Vital Energy and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital 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.| Vital Energy vs. SM Energy Co | Vital Energy vs. Permian Resources | Vital Energy vs. Matador Resources | Vital 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |