Correlation Between GeoPark and Comstock Resources
Can any of the company-specific risk be diversified away by investing in both GeoPark and Comstock Resources 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 GeoPark and Comstock Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeoPark and Comstock Resources, you can compare the effects of market volatilities on GeoPark and Comstock Resources 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 GeoPark with a short position of Comstock Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and Comstock Resources.
Diversification Opportunities for GeoPark and Comstock Resources
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between GeoPark and Comstock is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and Comstock Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Resources and GeoPark 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 GeoPark are associated (or correlated) with Comstock Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Resources has no effect on the direction of GeoPark i.e., GeoPark and Comstock Resources go up and down completely randomly.
Pair Corralation between GeoPark and Comstock Resources
Given the investment horizon of 90 days GeoPark is expected to under-perform the Comstock Resources. But the stock apears to be less risky and, when comparing its historical volatility, GeoPark is 1.83 times less risky than Comstock Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Comstock Resources is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,051 in Comstock Resources on November 25, 2024 and sell it today you would lose (97.00) from holding Comstock Resources or give up 4.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GeoPark vs. Comstock Resources
Performance |
Timeline |
GeoPark |
Comstock Resources |
GeoPark and Comstock Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GeoPark and Comstock Resources
The main advantage of trading using opposite GeoPark and Comstock Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoPark position performs unexpectedly, Comstock Resources 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 Comstock Resources will offset losses from the drop in Comstock Resources' long position.GeoPark vs. Evolution Petroleum | ||
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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