103.61 +1.5 (+1.45%) Sell

Don't lose faith in EOG now, it delivered good returns

13 min read

EOG was among the best performers today. On a longer term basis, investors in EOG RESOURCES INC made -0.02% per day. Friday's performance of +1.45% was a significant outperformance compared to it's daily average.

[Themes containing EOG]

EOG showed a down trend over the last 3 months. During this period EOG returned -9.37% and saw a maximum drawdown of -25.9%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in EOG till volatility reduces and a clear trend emerges.


EOG has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, EOG outperformed the SP500 index on 49% days. Which indicates that on days EOG outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

During the last three months EOG delivered profits on 52% days. However, it still managed to end this period in a loss. It's best return during this period (of +4.65%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -5.0%) was on Friday, 23 Nov, 2018. There was initially a bullish trend during this period which started on 27 Sep, 2018 and went on till 3 Oct, 2018. The bullish trend returned +3.99% to investors. This was followed by a bearish trend that started on 16 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -14.14% of investor capital.

On monthly basis, EOG delivered profits in more months over the last year, than losses. EOG delivered profits less regularly than SP500 index. EOG was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -18.65% compared to -7.28% returned by SP500 index in Oct 2018. EOG had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both EOG and SP500 index significantly outperform during months when quarterly/annual results are announced.

I have probably purchased fifty 'hot tips' in my career, maybe even more. When I put them all together, I know I am a net loser.
-- Charles Schwab

EOG is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in EOG's volatility from 10 Sep, 2018 to 15 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that EOG has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in EOG derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

EOG has more chance of extreme outcomes than the SP500 index. Therefore, EOG must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than EOG.

On a general note (since you are interested in EOG), three mid cap instruments that deserve special mention are AMD, SQ and TWTR. They have all outperformed the market and must be closely watched for investment opportunities.

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