Correlation Between EOG Resources and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both EOG Resources and ProShares UltraShort 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 ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and ProShares UltraShort SP500, you can compare the effects of market volatilities on EOG Resources and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and ProShares UltraShort.
Diversification Opportunities for EOG Resources and ProShares UltraShort
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EOG and ProShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of EOG Resources i.e., EOG Resources and ProShares UltraShort go up and down completely randomly.
Pair Corralation between EOG Resources and ProShares UltraShort
Considering the 90-day investment horizon EOG Resources is expected to generate 1.0 times more return on investment than ProShares UltraShort. However, EOG Resources is 1.0 times more volatile than ProShares UltraShort SP500. It trades about 0.03 of its potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about -0.03 per unit of risk. If you would invest 12,639 in EOG Resources on January 24, 2024 and sell it today you would earn a total of 751.00 from holding EOG Resources or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
EOG Resources vs. ProShares UltraShort SP500
Performance |
| Timeline |
| EOG Resources |
| ProShares UltraShort |
EOG Resources and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and ProShares UltraShort
The main advantage of trading using opposite EOG Resources and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| EOG Resources vs. Pioneer Natural Resources | EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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