Correlation Between Woodside Energy and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Woodside 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 Woodside 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 Woodside Energy Group and EOG Resources, you can compare the effects of market volatilities on Woodside 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 Woodside Energy with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and EOG Resources.
Diversification Opportunities for Woodside Energy and EOG Resources
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Woodside and EOG is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Woodside 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 Woodside Energy Group 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 Woodside Energy i.e., Woodside Energy and EOG Resources go up and down completely randomly.
Pair Corralation between Woodside Energy and EOG Resources
Assuming the 90 days trading horizon Woodside Energy Group is expected to under-perform the EOG Resources. But the stock apears to be less risky and, when comparing its historical volatility, Woodside Energy Group is 1.01 times less risky than EOG Resources. The stock trades about -0.01 of its potential returns per unit of risk. The EOG Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,516 in EOG Resources on August 27, 2024 and sell it today you would earn a total of 1,550 from holding EOG Resources or generate 13.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodside Energy Group vs. EOG Resources
Performance |
| Timeline |
| Woodside Energy Group |
| EOG Resources |
Woodside Energy and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and EOG Resources
The main advantage of trading using opposite Woodside Energy and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside 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.| Woodside Energy vs. LPKF Laser Electronics | Woodside Energy vs. Electronic Arts | Woodside Energy vs. LG Electronics | Woodside Energy vs. Richardson Electronics |
| EOG Resources vs. Canadian Natural Resources | EOG Resources vs. Pioneer Natural Resources | EOG Resources vs. Woodside Energy Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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