Correlation Between EQT and Barnwell Industries

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

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

Diversification Opportunities for EQT and Barnwell Industries

-0.87

Correlation Coefficient

EQT  Barnwell Industries

Pay attention - limited upside

The 3 months correlation between EQT and Barnwell is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and Barnwell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnwell Industries and EQT 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 EQT Corporation are associated (or correlated) with Barnwell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnwell Industries has no effect on the direction of EQT i.e., EQT and Barnwell Industries go up and down completely randomly.

Pair Corralation between EQT and Barnwell Industries

Considering the 90-day investment horizon EQT Corporation is expected to generate 0.87 times more return on investment than Barnwell Industries. However, EQT Corporation is 1.15 times less risky than Barnwell Industries. It trades about 0.23 of its potential returns per unit of risk. Barnwell Industries is currently generating about -0.16 per unit of risk. If you would invest  3,341  in EQT Corporation on September 14, 2024 and sell it today you would earn a total of  1,218  from holding EQT Corporation or generate 36.46% return on investment over 90 days.

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

EQT Corp.  vs.  Barnwell Industries

EQT Corporation

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 17 (%) 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.

Barnwell Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barnwell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with EQT and Barnwell Industries

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

The idea behind EQT Corporation and Barnwell Industries 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.