Correlation Between EOG Resources and Sound Energy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Sound 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 Sound 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 Sound Energy plc, you can compare the effects of market volatilities on EOG Resources and Sound 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 Sound Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Sound Energy.

Diversification Opportunities for EOG Resources and Sound Energy

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between EOG and Sound is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Sound Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound 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 Sound Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Energy plc has no effect on the direction of EOG Resources i.e., EOG Resources and Sound Energy go up and down completely randomly.

Pair Corralation between EOG Resources and Sound Energy

Considering the 90-day investment horizon EOG Resources is expected to generate 7.55 times less return on investment than Sound Energy. But when comparing it to its historical volatility, EOG Resources is 3.75 times less risky than Sound Energy. It trades about 0.09 of its potential returns per unit of risk. Sound Energy plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2.64  in Sound Energy plc on December 27, 2024 and sell it today you would earn a total of  2.08  from holding Sound Energy plc or generate 78.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

EOG Resources  vs.  Sound Energy plc

 Performance 
       Timeline  
EOG Resources 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in EOG Resources are ranked lower than 7 (%) 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.
Sound Energy plc 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sound Energy plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Sound Energy reported solid returns over the last few months and may actually be approaching a breakup point.

EOG Resources and Sound Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EOG Resources and Sound Energy

The main advantage of trading using opposite EOG Resources and Sound Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Sound 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 Sound Energy will offset losses from the drop in Sound Energy's long position.
The idea behind EOG Resources and Sound 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.
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device