Correlation Between EOG Resources and Pharos Energy

Can any of the company-specific risk be diversified away by investing in both EOG Resources and Pharos Energy 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 EOG Resources and Pharos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG Resources and Pharos Energy plc, you can compare the effects of market volatilities on EOG Resources and Pharos Energy 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 EOG Resources with a short position of Pharos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Pharos Energy.

Diversification Opportunities for EOG Resources and Pharos Energy

-0.65

Correlation Coefficient

EOG Resources  Pharos Energy

Excellent diversification

The 3 months correlation between EOG and Pharos is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Pharos Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharos Energy plc and EOG Resources 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 EOG Resources are associated (or correlated) with Pharos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharos Energy plc has no effect on the direction of EOG Resources i.e., EOG Resources and Pharos Energy go up and down completely randomly.

Pair Corralation between EOG Resources and Pharos Energy

If you would invest  25.00  in Pharos Energy plc on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Pharos Energy plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EOG Resources  vs.  Pharos Energy plc

EOG Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EOG Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, EOG Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pharos Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharos Energy plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EOG Resources and Pharos Energy

The main advantage of trading using opposite EOG Resources and Pharos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Pharos Energy 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 Pharos Energy will offset losses from the drop in Pharos Energy's long position.

The idea behind EOG Resources and Pharos Energy plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.