Correlation Between Battalion Oil and GeoPark
Can any of the company-specific risk be diversified away by investing in both Battalion Oil and GeoPark 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 Battalion Oil and GeoPark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Battalion Oil Corp and GeoPark, you can compare the effects of market volatilities on Battalion Oil and GeoPark 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 Battalion Oil with a short position of GeoPark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and GeoPark.
Diversification Opportunities for Battalion Oil and GeoPark
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Battalion and GeoPark is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and GeoPark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoPark and Battalion 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 Battalion Oil Corp are associated (or correlated) with GeoPark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoPark has no effect on the direction of Battalion Oil i.e., Battalion Oil and GeoPark go up and down completely randomly.
Pair Corralation between Battalion Oil and GeoPark
Given the investment horizon of 90 days Battalion Oil Corp is expected to under-perform the GeoPark. In addition to that, Battalion Oil is 4.01 times more volatile than GeoPark. It trades about -0.16 of its total potential returns per unit of risk. GeoPark is currently generating about 0.11 per unit of volatility. If you would invest 812.00 in GeoPark on August 29, 2024 and sell it today you would earn a total of 52.00 from holding GeoPark or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Battalion Oil Corp vs. GeoPark
Performance |
| Timeline |
| Battalion Oil Corp |
| GeoPark |
Battalion Oil and GeoPark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Battalion Oil and GeoPark
The main advantage of trading using opposite Battalion Oil and GeoPark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battalion Oil position performs unexpectedly, GeoPark 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 GeoPark will offset losses from the drop in GeoPark's long position.| Battalion Oil vs. ConocoPhillips | Battalion Oil vs. Occidental Petroleum | Battalion Oil vs. EOG Resources | Battalion Oil vs. Coterra Energy |
| GeoPark vs. ConocoPhillips | GeoPark vs. Occidental Petroleum | GeoPark vs. EOG Resources | GeoPark vs. Coterra Energy |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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