Correlation Between EON Resources and Woodside Energy

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

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

Diversification Opportunities for EON Resources and Woodside Energy

0.75

Correlation Coefficient

EON Resources  Woodside Energy

Poor diversification

The 3 months correlation between EON and Woodside is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group 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 Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of EON Resources i.e., EON Resources and Woodside Energy go up and down completely randomly.

Pair Corralation between EON Resources and Woodside Energy

Given the investment horizon of 90 days EON Resources is expected to under-perform the Woodside Energy. In addition to that, EON Resources is 2.9 times more volatile than Woodside Energy Group. It trades about -0.2 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about -0.2 per unit of volatility. If you would invest  1,629  in Woodside Energy Group on September 24, 2024 and sell it today you would lose (148.00) from holding Woodside Energy Group or give up 9.09% of portfolio value over 90 days.

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

EON Resources  vs.  Woodside Energy Group

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 relatively invariable basic indicators, EON Resources is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Woodside Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EON Resources and Woodside Energy

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

The idea behind EON Resources and Woodside Energy Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.