Correlation Between GeoPark and Obsidian Energy
Can any of the company-specific risk be diversified away by investing in both GeoPark and Obsidian Energy 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 Obsidian Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeoPark and Obsidian Energy, you can compare the effects of market volatilities on GeoPark and Obsidian Energy 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 Obsidian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and Obsidian Energy.
Diversification Opportunities for GeoPark and Obsidian Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GeoPark and Obsidian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and Obsidian Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obsidian Energy 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 Obsidian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obsidian Energy has no effect on the direction of GeoPark i.e., GeoPark and Obsidian Energy go up and down completely randomly.
Pair Corralation between GeoPark and Obsidian Energy
Given the investment horizon of 90 days GeoPark is expected to generate 1.05 times more return on investment than Obsidian Energy. However, GeoPark is 1.05 times more volatile than Obsidian Energy. It trades about 0.17 of its potential returns per unit of risk. Obsidian Energy is currently generating about -0.01 per unit of risk. If you would invest 819.00 in GeoPark on August 31, 2024 and sell it today you would earn a total of 89.00 from holding GeoPark or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GeoPark vs. Obsidian Energy
Performance |
| Timeline |
| GeoPark |
| Obsidian Energy |
GeoPark and Obsidian Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeoPark and Obsidian Energy
The main advantage of trading using opposite GeoPark and Obsidian Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoPark position performs unexpectedly, Obsidian Energy 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 Obsidian Energy will offset losses from the drop in Obsidian Energy's long position.| GeoPark vs. Evolution Petroleum | GeoPark vs. Granite Ridge Resources | GeoPark vs. PHX Minerals | GeoPark vs. California Resources Corp |
| Obsidian Energy vs. Baytex Energy Corp | Obsidian Energy vs. Vermilion Energy | Obsidian Energy vs. Canadian Natural Resources | Obsidian Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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