Correlation Between Eagle Ford and ERHC Energy

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

Diversification Opportunities for Eagle Ford and ERHC Energy

0.0

Correlation Coefficient

Eagle Ford  ERHC Energy

Pay attention - limited upside

The 3 months correlation between Eagle and ERHC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Ford Oil and ERHC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERHC Energy 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 ERHC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERHC Energy has no effect on the direction of Eagle Ford i.e., Eagle Ford and ERHC Energy go up and down completely randomly.

Pair Corralation between Eagle Ford and ERHC Energy

If you would invest  0.01  in ERHC Energy on May 6, 2025 and sell it today you would earn a total of  0.00  from holding ERHC Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Eagle Ford Oil  vs.  ERHC Energy

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.

ERHC Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ERHC Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, ERHC Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Ford and ERHC Energy

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

The idea behind Eagle Ford Oil and ERHC Energy 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.