Correlation Between Evolution Petroleum and Gran Tierra
Can any of the company-specific risk be diversified away by investing in both Evolution Petroleum and Gran Tierra 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 Gran Tierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Petroleum and Gran Tierra Energy, you can compare the effects of market volatilities on Evolution Petroleum and Gran Tierra 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 Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Petroleum and Gran Tierra.
Diversification Opportunities for Evolution Petroleum and Gran Tierra
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evolution and Gran is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Petroleum and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra Energy 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 Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Evolution Petroleum i.e., Evolution Petroleum and Gran Tierra go up and down completely randomly.
Pair Corralation between Evolution Petroleum and Gran Tierra
Considering the 90-day investment horizon Evolution Petroleum is expected to under-perform the Gran Tierra. But the stock apears to be less risky and, when comparing its historical volatility, Evolution Petroleum is 1.17 times less risky than Gran Tierra. The stock trades about -0.01 of its potential returns per unit of risk. The Gran Tierra Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 509.00 in Gran Tierra Energy on August 28, 2024 and sell it today you would earn a total of 94.00 from holding Gran Tierra Energy or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution Petroleum vs. Gran Tierra Energy
Performance |
| Timeline |
| Evolution Petroleum |
| Gran Tierra Energy |
Evolution Petroleum and Gran Tierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Petroleum and Gran Tierra
The main advantage of trading using opposite Evolution Petroleum and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Petroleum position performs unexpectedly, Gran Tierra 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 Gran Tierra will offset losses from the drop in Gran Tierra's long position.| Evolution Petroleum vs. GeoPark | Evolution Petroleum vs. Granite Ridge Resources | Evolution Petroleum vs. PHX Minerals | Evolution Petroleum vs. California Resources Corp |
| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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