Correlation Between Gulfport Energy and PetroShale
Can any of the company-specific risk be diversified away by investing in both Gulfport Energy and PetroShale 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 Gulfport Energy and PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulfport Energy Operating and PetroShale, you can compare the effects of market volatilities on Gulfport Energy and PetroShale 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 Gulfport Energy with a short position of PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulfport Energy and PetroShale.
Diversification Opportunities for Gulfport Energy and PetroShale
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gulfport and PetroShale is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gulfport Energy Operating and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and Gulfport 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 Gulfport Energy Operating are associated (or correlated) with PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Gulfport Energy i.e., Gulfport Energy and PetroShale go up and down completely randomly.
Pair Corralation between Gulfport Energy and PetroShale
Given the investment horizon of 90 days Gulfport Energy Operating is expected to under-perform the PetroShale. But the stock apears to be less risky and, when comparing its historical volatility, Gulfport Energy Operating is 1.33 times less risky than PetroShale. The stock trades about -0.22 of its potential returns per unit of risk. The PetroShale is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 31.00 in PetroShale on November 30, 2024 and sell it today you would earn a total of 0.00 from holding PetroShale or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gulfport Energy Operating vs. PetroShale
Performance |
| Timeline |
| Gulfport Energy Operating |
| PetroShale |
Gulfport Energy and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulfport Energy and PetroShale
The main advantage of trading using opposite Gulfport Energy and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulfport Energy position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Gulfport Energy vs. Epsilon Energy | ||
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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