Correlation Between EQT and Black Stone

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

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

Diversification Opportunities for EQT and Black Stone

0.87

Correlation Coefficient

EQT  Black Stone

Very poor diversification

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

Pair Corralation between EQT and Black Stone

Considering the 90-day investment horizon EQT Corporation is expected to generate 2.22 times more return on investment than Black Stone. However, EQT is 2.22 times more volatile than Black Stone Minerals. It trades about 0.25 of its potential returns per unit of risk. Black Stone Minerals is currently generating about 0.14 per unit of risk. If you would invest  3,278  in EQT Corporation on September 2, 2024 and sell it today you would earn a total of  1,266  from holding EQT Corporation or generate 38.62% return on investment over 90 days.

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

EQT Corp.  vs.  Black Stone Minerals

EQT Corporation

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 19 (%) 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.

Black Stone Minerals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Black Stone Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Black Stone may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EQT and Black Stone

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

The idea behind EQT Corporation and Black Stone Minerals 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.