Correlation Between Ring Energy and EQT

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

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

Diversification Opportunities for Ring Energy and EQT

-0.45

Correlation Coefficient

Ring Energy  EQT

Very good diversification

The 3 months correlation between Ring and EQT is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation and Ring 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 Ring Energy are associated (or correlated) with EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of Ring Energy i.e., Ring Energy and EQT go up and down completely randomly.

Pair Corralation between Ring Energy and EQT

Considering the 90-day investment horizon Ring Energy is expected to generate 4.89 times less return on investment than EQT. In addition to that, Ring Energy is 1.45 times more volatile than EQT Corporation. It trades about 0.05 of its total potential returns per unit of risk. EQT Corporation is currently generating about 0.36 per unit of volatility. If you would invest  3,664  in EQT Corporation on September 5, 2024 and sell it today you would earn a total of  817.00  from holding EQT Corporation or generate 22.3% return on investment over 90 days.

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

Ring Energy  vs.  EQT Corp.

Ring Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Ring Energy is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

EQT Corporation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 18 (%) 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.

Pair Trading with Ring Energy and EQT

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

The idea behind Ring Energy and EQT Corporation 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.