Correlation Between Eagle Ford and Australian Oil

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

By analyzing existing cross correlation between Eagle Ford Oil and Australian Oil Gas, you can compare the effects of market volatilities on Eagle Ford and Australian Oil 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 Eagle Ford with a short position of Australian Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Ford and Australian Oil.

Diversification Opportunities for Eagle Ford and Australian Oil

1.0

Correlation Coefficient

Eagle Ford  Australian Oil

No risk reduction

The 3 months correlation between Eagle and Australian is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Ford Oil and Australian Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oil Gas and Eagle Ford 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 Eagle Ford Oil are associated (or correlated) with Australian Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oil Gas has no effect on the direction of Eagle Ford i.e., Eagle Ford and Australian Oil go up and down completely randomly.

Pair Corralation between Eagle Ford and Australian Oil

If you would invest  0.21  in Australian Oil Gas on May 4, 2025 and sell it today you would earn a total of  0.00  from holding Australian Oil Gas or generate 0.0% return on investment over 90 days.

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

Eagle Ford Oil  vs.  Australian Oil Gas

Eagle Ford Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Ford Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Eagle Ford is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Australian Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Australian Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Australian Oil is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eagle Ford and Australian Oil

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

The idea behind Eagle Ford Oil and Australian Oil Gas 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.