Correlation Between EQT and Comstock Resources

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

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

Diversification Opportunities for EQT and Comstock Resources

0.98

Correlation Coefficient

EQT  Comstock Resources

Almost no diversification

The 3 months correlation between EQT and Comstock is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and Comstock Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Resources and EQT 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 EQT Corporation are associated (or correlated) with Comstock Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Resources has no effect on the direction of EQT i.e., EQT and Comstock Resources go up and down completely randomly.

Pair Corralation between EQT and Comstock Resources

Considering the 90-day investment horizon EQT is expected to generate 1.36 times less return on investment than Comstock Resources. But when comparing it to its historical volatility, EQT Corporation is 1.25 times less risky than Comstock Resources. It trades about 0.46 of its potential returns per unit of risk. Comstock Resources is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  1,115  in Comstock Resources on September 2, 2024 and sell it today you would earn a total of  442.00  from holding Comstock Resources or generate 39.64% return on investment over 90 days.

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

EQT Corp.  vs.  Comstock Resources

EQT Corporation

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EQT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Comstock Resources

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Comstock Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EQT and Comstock Resources

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

The idea behind EQT Corporation and Comstock Resources 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.