Correlation Between EOG Resources and Woodside Energy
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Woodside Energy 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 EOG Resources and Woodside Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Woodside Energy Group, you can compare the effects of market volatilities on EOG Resources and Woodside Energy 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 EOG Resources with a short position of Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Woodside Energy.
Diversification Opportunities for EOG Resources and Woodside Energy
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EOG and Woodside is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group and EOG Resources 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 EOG Resources are associated (or correlated) with Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of EOG Resources i.e., EOG Resources and Woodside Energy go up and down completely randomly.
Pair Corralation between EOG Resources and Woodside Energy
Assuming the 90 days horizon EOG Resources is expected to under-perform the Woodside Energy. But the stock apears to be less risky and, when comparing its historical volatility, EOG Resources is 1.5 times less risky than Woodside Energy. The stock trades about -0.65 of its potential returns per unit of risk. The Woodside Energy Group is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest 1,539 in Woodside Energy Group on September 23, 2024 and sell it today you would lose (149.00) from holding Woodside Energy Group or give up 9.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
EOG Resources vs. Woodside Energy Group
Performance |
Timeline |
EOG Resources |
Woodside Energy Group |
EOG Resources and Woodside Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EOG Resources and Woodside Energy
The main advantage of trading using opposite EOG Resources and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Woodside Energy 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 Woodside Energy will offset losses from the drop in Woodside Energy's long position.EOG Resources vs. Alibaba Group Holding | EOG Resources vs. ConocoPhillips | EOG Resources vs. CNOOC | EOG Resources vs. Canadian Natural Resources |
Woodside Energy vs. Alibaba Group Holding | Woodside Energy vs. ConocoPhillips | Woodside Energy vs. CNOOC | Woodside Energy vs. EOG 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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