Correlation Between Africa Oil and Gulfport Energy
Can any of the company-specific risk be diversified away by investing in both Africa Oil and Gulfport 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 Africa Oil and Gulfport Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Africa Oil Corp and Gulfport Energy Operating, you can compare the effects of market volatilities on Africa Oil and Gulfport 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 Africa Oil with a short position of Gulfport Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Africa Oil and Gulfport Energy.
Diversification Opportunities for Africa Oil and Gulfport Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Africa and Gulfport is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Africa Oil Corp and Gulfport Energy Operating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulfport Energy Operating and Africa 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 Africa Oil Corp are associated (or correlated) with Gulfport Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulfport Energy Operating has no effect on the direction of Africa Oil i.e., Africa Oil and Gulfport Energy go up and down completely randomly.
Pair Corralation between Africa Oil and Gulfport Energy
Assuming the 90 days horizon Africa Oil Corp is expected to generate 0.85 times more return on investment than Gulfport Energy. However, Africa Oil Corp is 1.17 times less risky than Gulfport Energy. It trades about 0.31 of its potential returns per unit of risk. Gulfport Energy Operating is currently generating about 0.19 per unit of risk. If you would invest 133.00 in Africa Oil Corp on October 15, 2024 and sell it today you would earn a total of 13.00 from holding Africa Oil Corp or generate 9.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Africa Oil Corp vs. Gulfport Energy Operating
Performance |
| Timeline |
| Africa Oil Corp |
| Gulfport Energy Operating |
Africa Oil and Gulfport Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Africa Oil and Gulfport Energy
The main advantage of trading using opposite Africa Oil and Gulfport Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Africa Oil position performs unexpectedly, Gulfport 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 Gulfport Energy will offset losses from the drop in Gulfport Energy's long position.| Africa Oil vs. Gear Energy | Africa Oil vs. Tamarack Valley Energy | Africa Oil vs. MEG Energy Corp | Africa Oil vs. Cardinal Energy |
| Gulfport Energy vs. Epsilon Energy | Gulfport Energy vs. Granite Ridge Resources | Gulfport Energy vs. North European Oil | Gulfport Energy vs. CNX Resources Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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