Correlation Between Earthstone Energy and Gran Tierra
Can any of the company-specific risk be diversified away by investing in both Earthstone Energy 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 Earthstone Energy and Gran Tierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earthstone Energy and Gran Tierra Energy, you can compare the effects of market volatilities on Earthstone Energy 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 Earthstone Energy with a short position of Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earthstone Energy and Gran Tierra.
Diversification Opportunities for Earthstone Energy and Gran Tierra
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Earthstone and Gran is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Earthstone Energy 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 Earthstone Energy 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 Earthstone Energy 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 Earthstone Energy i.e., Earthstone Energy and Gran Tierra go up and down completely randomly.
Pair Corralation between Earthstone Energy and Gran Tierra
If you would invest 1,532 in Earthstone Energy on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Earthstone Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Earthstone Energy vs. Gran Tierra Energy
Performance |
| Timeline |
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gran Tierra Energy |
Earthstone Energy and Gran Tierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earthstone Energy and Gran Tierra
The main advantage of trading using opposite Earthstone Energy and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earthstone Energy 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.| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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