Correlation Between EON Resources and Expand Energy

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

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

Diversification Opportunities for EON Resources and Expand Energy

-0.48

Correlation Coefficient

EON Resources  Expand Energy

Very good diversification

The 3 months correlation between EON and Expand is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy and EON 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 EON Resources are associated (or correlated) with Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of EON Resources i.e., EON Resources and Expand Energy go up and down completely randomly.

Pair Corralation between EON Resources and Expand Energy

Given the investment horizon of 90 days EON Resources is expected to generate 5.07 times less return on investment than Expand Energy. In addition to that, EON Resources is 5.86 times more volatile than Expand Energy. It trades about 0.01 of its total potential returns per unit of risk. Expand Energy is currently generating about 0.26 per unit of volatility. If you would invest  5,684  in Expand Energy on September 17, 2024 and sell it today you would earn a total of  3,337  from holding Expand Energy or generate 58.71% return on investment over 90 days.

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

EON Resources  vs.  Expand Energy

EON Resources

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent basic indicators, EON Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Expand Energy

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Expand Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EON Resources and Expand Energy

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

The idea behind EON Resources and Expand Energy 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.