Correlation Between EON Resources and Mexco Energy

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

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

Diversification Opportunities for EON Resources and Mexco Energy

0.38

Correlation Coefficient

EON Resources  Mexco Energy

Weak diversification

The 3 months correlation between EON and Mexco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Mexco Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexco Energy and EON 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 EON Resources are associated (or correlated) with Mexco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexco Energy has no effect on the direction of EON Resources i.e., EON Resources and Mexco Energy go up and down completely randomly.

Pair Corralation between EON Resources and Mexco Energy

Given the investment horizon of 90 days EON Resources is expected to generate 2.11 times more return on investment than Mexco Energy. However, EON Resources is 2.11 times more volatile than Mexco Energy. It trades about -0.01 of its potential returns per unit of risk. Mexco Energy is currently generating about -0.17 per unit of risk. If you would invest  46.00  in EON Resources on March 5, 2025 and sell it today you would lose (7.00) from holding EON Resources or give up 15.22% of portfolio value over 90 days.

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

EON Resources  vs.  Mexco Energy

EON Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EON Resources is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Mexco Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mexco Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EON Resources and Mexco Energy

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

The idea behind EON Resources and Mexco 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.