Correlation Between Santos and EQT

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

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

Diversification Opportunities for Santos and EQT

-0.72

Correlation Coefficient

Santos  EQT

Pay attention - limited upside

The 3 months correlation between Santos and EQT is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Santos and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation and Santos 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 Santos 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 Santos i.e., Santos and EQT go up and down completely randomly.

Pair Corralation between Santos and EQT

Assuming the 90 days horizon Santos is expected to under-perform the EQT. In addition to that, Santos is 1.53 times more volatile than EQT Corporation. It trades about -0.04 of its total potential returns per unit of risk. EQT Corporation is currently generating about 0.22 per unit of volatility. If you would invest  3,313  in EQT Corporation on September 17, 2024 and sell it today you would earn a total of  1,190  from holding EQT Corporation or generate 35.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Santos  vs.  EQT Corp.

Santos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santos has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

EQT Corporation

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 17 (%) 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 Santos and EQT

The main advantage of trading using opposite Santos and EQT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos 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 Santos 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.