Correlation Between EQT and Gulf Keystone
Can any of the company-specific risk be diversified away by investing in both EQT and Gulf Keystone 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 Gulf Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT Corporation and Gulf Keystone Petroleum, you can compare the effects of market volatilities on EQT and Gulf Keystone 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 Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT and Gulf Keystone.
Diversification Opportunities for EQT and Gulf Keystone
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EQT and Gulf is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum 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 Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of EQT i.e., EQT and Gulf Keystone go up and down completely randomly.
Pair Corralation between EQT and Gulf Keystone
Considering the 90-day investment horizon EQT is expected to generate 2.23 times less return on investment than Gulf Keystone. But when comparing it to its historical volatility, EQT Corporation is 2.37 times less risky than Gulf Keystone. It trades about 0.05 of its potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 158.00 in Gulf Keystone Petroleum on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Gulf Keystone Petroleum or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
EQT Corp. vs. Gulf Keystone Petroleum
Performance |
| Timeline |
| EQT Corporation |
| Gulf Keystone Petroleum |
EQT and Gulf Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT and Gulf Keystone
The main advantage of trading using opposite EQT and Gulf Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT position performs unexpectedly, Gulf Keystone 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 Gulf Keystone will offset losses from the drop in Gulf Keystone's long position.| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
| Gulf Keystone vs. Permian Resources | Gulf Keystone vs. Devon Energy | Gulf Keystone vs. EOG Resources | Gulf Keystone 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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