Correlation Between Eagle Ford and Arrow Exploration

Can any of the company-specific risk be diversified away by investing in both Eagle Ford and Arrow Exploration 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 Arrow Exploration 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 Arrow Exploration Corp, you can compare the effects of market volatilities on Eagle Ford and Arrow Exploration 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 Arrow Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Ford and Arrow Exploration.

Diversification Opportunities for Eagle Ford and Arrow Exploration

0.05

Correlation Coefficient

Eagle Ford  Arrow Exploration

Significant diversification

The 3 months correlation between Eagle and Arrow is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Ford Oil and Arrow Exploration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Exploration Corp 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 Arrow Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Exploration Corp has no effect on the direction of Eagle Ford i.e., Eagle Ford and Arrow Exploration go up and down completely randomly.

Pair Corralation between Eagle Ford and Arrow Exploration

Given the investment horizon of 90 days Eagle Ford is expected to generate 9.3 times less return on investment than Arrow Exploration. But when comparing it to its historical volatility, Eagle Ford Oil is 10.18 times less risky than Arrow Exploration. It trades about 0.13 of its potential returns per unit of risk. Arrow Exploration Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Arrow Exploration Corp on September 13, 2025 and sell it today you would lose (5.00) from holding Arrow Exploration Corp or give up 26.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Eagle Ford Oil  vs.  Arrow Exploration Corp

Eagle Ford Oil

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Ford Oil are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Eagle Ford exhibited solid returns over the last few months and may actually be approaching a breakup point.

Arrow Exploration Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Exploration Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Arrow Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Ford and Arrow Exploration

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

The idea behind Eagle Ford Oil and Arrow Exploration Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.