Correlation Between EOG Resources and Barnwell Industries
Can any of the company-specific risk be diversified away by investing in both EOG Resources 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 EOG Resources and Barnwell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Barnwell Industries, you can compare the effects of market volatilities on EOG Resources 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 EOG Resources with a short position of Barnwell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Barnwell Industries.
Diversification Opportunities for EOG Resources and Barnwell Industries
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EOG and Barnwell is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Barnwell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnwell Industries 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 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 EOG Resources i.e., EOG Resources and Barnwell Industries go up and down completely randomly.
Pair Corralation between EOG Resources and Barnwell Industries
Considering the 90-day investment horizon EOG Resources is expected to generate 1.84 times less return on investment than Barnwell Industries. But when comparing it to its historical volatility, EOG Resources is 2.65 times less risky than Barnwell Industries. It trades about 0.34 of its potential returns per unit of risk. Barnwell Industries is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 238.00 in Barnwell Industries on January 25, 2024 and sell it today you would earn a total of 33.00 from holding Barnwell Industries or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EOG Resources vs. Barnwell Industries
Performance |
| Timeline |
| EOG Resources |
| Barnwell Industries |
EOG Resources and Barnwell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Barnwell Industries
The main advantage of trading using opposite EOG Resources and Barnwell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources 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.| EOG Resources vs. Pioneer Natural Resources | EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy |
| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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