Correlation Between ConocoPhillips and EOG Resources
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and EOG 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 ConocoPhillips and EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and EOG Resources, you can compare the effects of market volatilities on ConocoPhillips and EOG 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 ConocoPhillips with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and EOG Resources.
Diversification Opportunities for ConocoPhillips and EOG Resources
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConocoPhillips and EOG is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and EOG Resources go up and down completely randomly.
Pair Corralation between ConocoPhillips and EOG Resources
Assuming the 90 days horizon ConocoPhillips is expected to under-perform the EOG Resources. In addition to that, ConocoPhillips is 1.06 times more volatile than EOG Resources. It trades about -0.03 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.02 per unit of volatility. If you would invest 11,212 in EOG Resources on September 25, 2024 and sell it today you would earn a total of 170.00 from holding EOG Resources or generate 1.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ConocoPhillips vs. EOG Resources
Performance |
Timeline |
ConocoPhillips |
EOG Resources |
ConocoPhillips and EOG Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ConocoPhillips and EOG Resources
The main advantage of trading using opposite ConocoPhillips and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, EOG 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 EOG Resources will offset losses from the drop in EOG Resources' long position.ConocoPhillips vs. Alibaba Group Holding | ConocoPhillips vs. CNOOC | ConocoPhillips vs. EOG Resources | ConocoPhillips vs. Canadian Natural Resources |
EOG Resources vs. Alibaba Group Holding | EOG Resources vs. ConocoPhillips | EOG Resources vs. CNOOC | EOG Resources vs. Canadian Natural Resources |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |