Correlation Between United Homes and EON Resources

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

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

Diversification Opportunities for United Homes and EON Resources

0.41

Correlation Coefficient

United Homes  EON Resources

Very weak diversification

The 3 months correlation between United and EON is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources and United Homes 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 United Homes Group are associated (or correlated) with EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of United Homes i.e., United Homes and EON Resources go up and down completely randomly.

Pair Corralation between United Homes and EON Resources

Considering the 90-day investment horizon United Homes Group is expected to generate 0.79 times more return on investment than EON Resources. However, United Homes Group is 1.26 times less risky than EON Resources. It trades about -0.09 of its potential returns per unit of risk. EON Resources is currently generating about -0.25 per unit of risk. If you would invest  537.00  in United Homes Group on September 22, 2024 and sell it today you would lose (119.00) from holding United Homes Group or give up 22.16% of portfolio value over 90 days.

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

United Homes Group  vs.  EON Resources

United Homes Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Homes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with United Homes and EON Resources

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

The idea behind United Homes Group and EON Resources 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.