Correlation Between Ranger Oil and EOG Resources

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

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

Diversification Opportunities for Ranger Oil and EOG Resources

-0.04

Correlation Coefficient

Ranger Oil  EOG Resources

Good diversification

The 3 months correlation between Ranger and EOG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Oil Corp and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and Ranger Oil 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 Ranger Oil Corp are associated (or correlated) with EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Ranger Oil i.e., Ranger Oil and EOG Resources go up and down completely randomly.

Pair Corralation between Ranger Oil and EOG Resources

Given the investment horizon of 90 days Ranger Oil is expected to generate 2.27 times less return on investment than EOG Resources. In addition to that, Ranger Oil is 1.52 times more volatile than EOG Resources. It trades about 0.0 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.01 per unit of volatility. If you would invest  11,526  in EOG Resources on September 24, 2024 and sell it today you would earn a total of  378.00  from holding EOG Resources or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.69%
Values	Daily Returns

Ranger Oil Corp  vs.  EOG Resources

Ranger Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

EOG Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EOG Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ranger Oil and EOG Resources

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

The idea behind Ranger Oil Corp and EOG Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.