Correlation Between EOG Resources and Pancontinental Oil

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

By analyzing existing cross correlation between EOG Resources and Pancontinental Oil Gas, you can compare the effects of market volatilities on EOG Resources and Pancontinental Oil 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 Pancontinental Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Pancontinental Oil.

Diversification Opportunities for EOG Resources and Pancontinental Oil

0.13

Correlation Coefficient

EOG Resources  Pancontinental Oil

Average diversification

The 3 months correlation between EOG and Pancontinental is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Pancontinental Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pancontinental Oil Gas 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 Pancontinental Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pancontinental Oil Gas has no effect on the direction of EOG Resources i.e., EOG Resources and Pancontinental Oil go up and down completely randomly.

Pair Corralation between EOG Resources and Pancontinental Oil

Considering the 90-day investment horizon EOG Resources is expected to generate 0.12 times more return on investment than Pancontinental Oil. However, EOG Resources is 8.43 times less risky than Pancontinental Oil. It trades about 0.06 of its potential returns per unit of risk. Pancontinental Oil Gas is currently generating about -0.03 per unit of risk. If you would invest  11,973  in EOG Resources on December 30, 2024 and sell it today you would earn a total of  686.00  from holding EOG Resources or generate 5.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

EOG Resources  vs.  Pancontinental Oil Gas

EOG Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EOG Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, EOG Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pancontinental Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pancontinental Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EOG Resources and Pancontinental Oil

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

The idea behind EOG Resources and Pancontinental Oil Gas 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.