Correlation Between Evolution Petroleum and Granite Ridge
Can any of the company-specific risk be diversified away by investing in both Evolution Petroleum and Granite Ridge 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 Evolution Petroleum and Granite Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Petroleum and Granite Ridge Resources, you can compare the effects of market volatilities on Evolution Petroleum and Granite Ridge 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 Evolution Petroleum with a short position of Granite Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Petroleum and Granite Ridge.
Diversification Opportunities for Evolution Petroleum and Granite Ridge
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Evolution and Granite is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Petroleum and Granite Ridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Ridge Resources and Evolution Petroleum 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 Evolution Petroleum are associated (or correlated) with Granite Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Ridge Resources has no effect on the direction of Evolution Petroleum i.e., Evolution Petroleum and Granite Ridge go up and down completely randomly.
Pair Corralation between Evolution Petroleum and Granite Ridge
Considering the 90-day investment horizon Evolution Petroleum is expected to generate 0.98 times more return on investment than Granite Ridge. However, Evolution Petroleum is 1.02 times less risky than Granite Ridge. It trades about 0.29 of its potential returns per unit of risk. Granite Ridge Resources is currently generating about 0.29 per unit of risk. If you would invest 519.00 in Evolution Petroleum on August 28, 2024 and sell it today you would earn a total of 67.00 from holding Evolution Petroleum or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution Petroleum vs. Granite Ridge Resources
Performance |
| Timeline |
| Evolution Petroleum |
| Granite Ridge Resources |
Evolution Petroleum and Granite Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Petroleum and Granite Ridge
The main advantage of trading using opposite Evolution Petroleum and Granite Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Petroleum position performs unexpectedly, Granite Ridge 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 Granite Ridge will offset losses from the drop in Granite Ridge's long position.| Evolution Petroleum vs. Devon Energy | Evolution Petroleum vs. ConocoPhillips | Evolution Petroleum vs. Occidental Petroleum | Evolution Petroleum vs. Permian Resources |
| Granite Ridge vs. Devon Energy | Granite Ridge vs. ConocoPhillips | Granite Ridge vs. Occidental Petroleum | Granite Ridge vs. Permian Resources |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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