Correlation Between EON Resources and Church Dwight

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

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

Diversification Opportunities for EON Resources and Church Dwight

-0.58

Correlation Coefficient

EON Resources  Church Dwight

Excellent diversification

The 3 months correlation between EON and Church is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight and EON 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 EON Resources are associated (or correlated) with Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of EON Resources i.e., EON Resources and Church Dwight go up and down completely randomly.

Pair Corralation between EON Resources and Church Dwight

Given the investment horizon of 90 days EON Resources is expected to under-perform the Church Dwight. In addition to that, EON Resources is 10.5 times more volatile than Church Dwight. It trades about -0.01 of its total potential returns per unit of risk. Church Dwight is currently generating about 0.05 per unit of volatility. If you would invest  8,451  in Church Dwight on October 5, 2024 and sell it today you would earn a total of  2,023  from holding Church Dwight or generate 23.94% return on investment over 90 days.

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

EON Resources  vs.  Church Dwight

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Church Dwight

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Church Dwight is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EON Resources and Church Dwight

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

The idea behind EON Resources and Church Dwight 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.