Correlation Between Cross Timbers and EON Resources

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

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

Diversification Opportunities for Cross Timbers and EON Resources

0.39

Correlation Coefficient

Cross Timbers  EON Resources

Weak diversification

The 3 months correlation between Cross and EON is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cross Timbers Royalty and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources and Cross Timbers 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 Cross Timbers Royalty are associated (or correlated) with EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Cross Timbers i.e., Cross Timbers and EON Resources go up and down completely randomly.

Pair Corralation between Cross Timbers and EON Resources

Considering the 90-day investment horizon Cross Timbers Royalty is expected to under-perform the EON Resources. But the stock apears to be less risky and, when comparing its historical volatility, Cross Timbers Royalty is 4.95 times less risky than EON Resources. The stock trades about -0.07 of its potential returns per unit of risk. The EON Resources is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  203.00  in EON Resources on September 24, 2024 and sell it today you would lose (143.60) from holding EON Resources or give up 70.74% of portfolio value over 90 days.

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

Cross Timbers Royalty  vs.  EON Resources

Cross Timbers Royalty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cross Timbers Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EON Resources

Risk-Adjusted Performance

0 of 100

Very 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 invariable basic indicators, EON Resources is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cross Timbers and EON Resources

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

The idea behind Cross Timbers Royalty and EON 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..