Correlation Between EOG Resources and Bowleven PLC
Can any of the company-specific risk be diversified away by investing in both EOG Resources and Bowleven PLC 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 EOG Resources and Bowleven PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Bowleven PLC, you can compare the effects of market volatilities on EOG Resources and Bowleven PLC 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 EOG Resources with a short position of Bowleven PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Bowleven PLC.
Diversification Opportunities for EOG Resources and Bowleven PLC
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EOG and Bowleven is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Bowleven PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowleven PLC and EOG 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 EOG Resources are associated (or correlated) with Bowleven PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowleven PLC has no effect on the direction of EOG Resources i.e., EOG Resources and Bowleven PLC go up and down completely randomly.
Pair Corralation between EOG Resources and Bowleven PLC
Considering the 90-day investment horizon EOG Resources is expected to under-perform the Bowleven PLC. But the stock apears to be less risky and, when comparing its historical volatility, EOG Resources is 23.83 times less risky than Bowleven PLC. The stock trades about -0.08 of its potential returns per unit of risk. The Bowleven PLC is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 0.11 in Bowleven PLC on February 6, 2024 and sell it today you would earn a total of 0.29 from holding Bowleven PLC or generate 263.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
EOG Resources vs. Bowleven PLC
Performance |
Timeline |
EOG Resources |
Bowleven PLC |
EOG Resources and Bowleven PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EOG Resources and Bowleven PLC
The main advantage of trading using opposite EOG Resources and Bowleven PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, Bowleven PLC 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 Bowleven PLC will offset losses from the drop in Bowleven PLC's long position.EOG Resources vs. Sky Petroleum | EOG Resources vs. FEC Resources | EOG Resources vs. Savoy Energy Corp | EOG Resources vs. Spindletop OG |
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Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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