Correlation Between EON Resources and EQT

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

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

Diversification Opportunities for EON Resources and EQT

0.32

Correlation Coefficient

EON Resources  EQT

Weak diversification

The 3 months correlation between EON and EQT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation 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 EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of EON Resources i.e., EON Resources and EQT go up and down completely randomly.

Pair Corralation between EON Resources and EQT

Given the investment horizon of 90 days EON Resources is expected to generate 1.27 times less return on investment than EQT. In addition to that, EON Resources is 3.84 times more volatile than EQT Corporation. It trades about 0.03 of its total potential returns per unit of risk. EQT Corporation is currently generating about 0.15 per unit of volatility. If you would invest  4,405  in EQT Corporation on December 26, 2024 and sell it today you would earn a total of  1,020  from holding EQT Corporation or generate 23.16% return on investment over 90 days.

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

EON Resources  vs.  EQT Corp.

EON Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EON Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, EON Resources reported solid returns over the last few months and may actually be approaching a breakup point.

EQT Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EQT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EON Resources and EQT

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

The idea behind EON Resources and EQT Corporation 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.