Correlation Between EOG Resources and Harbour Energy

Can any of the company-specific risk be diversified away by investing in both EOG Resources and Harbour 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 Harbour 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 Harbour Energy plc, you can compare the effects of market volatilities on EOG Resources and Harbour 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 Harbour Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Harbour Energy.

Diversification Opportunities for EOG Resources and Harbour Energy

-0.01

Correlation Coefficient

EOG Resources  Harbour Energy

Good diversification

The 3 months correlation between EOG and Harbour is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Harbour Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbour Energy plc 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 Harbour Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbour Energy plc has no effect on the direction of EOG Resources i.e., EOG Resources and Harbour Energy go up and down completely randomly.

Pair Corralation between EOG Resources and Harbour Energy

Considering the 90-day investment horizon EOG Resources is expected to generate 0.79 times more return on investment than Harbour Energy. However, EOG Resources is 1.26 times less risky than Harbour Energy. It trades about 0.02 of its potential returns per unit of risk. Harbour Energy plc is currently generating about -0.09 per unit of risk. If you would invest  12,391  in EOG Resources on October 7, 2024 and sell it today you would earn a total of  266.00  from holding EOG Resources or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EOG Resources  vs.  Harbour Energy plc

EOG Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EOG Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Harbour Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EOG Resources and Harbour Energy

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

The idea behind EOG Resources and Harbour Energy plc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.