Correlation Between EQT and Gran Tierra
Can any of the company-specific risk be diversified away by investing in both EQT 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 EQT and Gran Tierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT Corporation and Gran Tierra Energy, you can compare the effects of market volatilities on EQT 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 EQT with a short position of Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT and Gran Tierra.
Diversification Opportunities for EQT and Gran Tierra
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EQT and Gran is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. 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 EQT 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 EQT Corporation 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 EQT i.e., EQT and Gran Tierra go up and down completely randomly.
Pair Corralation between EQT and Gran Tierra
Considering the 90-day investment horizon EQT Corporation is expected to generate 0.87 times more return on investment than Gran Tierra. However, EQT Corporation is 1.14 times less risky than Gran Tierra. It trades about 0.26 of its potential returns per unit of risk. Gran Tierra Energy is currently generating about 0.11 per unit of risk. If you would invest 3,841 in EQT Corporation on August 31, 2024 and sell it today you would earn a total of 687.00 from holding EQT Corporation or generate 17.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT Corp. vs. Gran Tierra Energy
Performance |
| Timeline |
| EQT Corporation |
| Gran Tierra Energy |
EQT and Gran Tierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT and Gran Tierra
The main advantage of trading using opposite EQT and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT 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.| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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