Correlation Between GeoPark and EQT
Can any of the company-specific risk be diversified away by investing in both GeoPark and EQT 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 EQT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeoPark and EQT Corporation, you can compare the effects of market volatilities on GeoPark and EQT 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 EQT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and EQT.
Diversification Opportunities for GeoPark and EQT
Modest diversification
The 3 months correlation between GeoPark and EQT is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation 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 EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of GeoPark i.e., GeoPark and EQT go up and down completely randomly.
Pair Corralation between GeoPark and EQT
Given the investment horizon of 90 days GeoPark is expected to generate 3.03 times less return on investment than EQT. But when comparing it to its historical volatility, GeoPark is 1.05 times less risky than EQT. It trades about 0.11 of its potential returns per unit of risk. EQT Corporation is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,715 in EQT Corporation on August 29, 2024 and sell it today you would earn a total of 841.00 from holding EQT Corporation or generate 22.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GeoPark vs. EQT Corp.
Performance |
| Timeline |
| GeoPark |
| EQT Corporation |
GeoPark and EQT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeoPark and EQT
The main advantage of trading using opposite GeoPark and EQT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoPark position performs unexpectedly, EQT 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 EQT will offset losses from the drop in EQT's long position.| GeoPark vs. ConocoPhillips | GeoPark vs. Occidental Petroleum | GeoPark vs. EOG Resources | GeoPark vs. Coterra Energy |
| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |