Correlation Between GeoPark and PHX Minerals
Can any of the company-specific risk be diversified away by investing in both GeoPark and PHX Minerals 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 PHX Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeoPark and PHX Minerals, you can compare the effects of market volatilities on GeoPark and PHX Minerals 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 PHX Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and PHX Minerals.
Diversification Opportunities for GeoPark and PHX Minerals
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GeoPark and PHX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals 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 PHX Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Minerals has no effect on the direction of GeoPark i.e., GeoPark and PHX Minerals go up and down completely randomly.
Pair Corralation between GeoPark and PHX Minerals
Given the investment horizon of 90 days GeoPark is expected to under-perform the PHX Minerals. In addition to that, GeoPark is 1.02 times more volatile than PHX Minerals. It trades about -0.02 of its total potential returns per unit of risk. PHX Minerals is currently generating about 0.03 per unit of volatility. If you would invest 324.00 in PHX Minerals on August 27, 2024 and sell it today you would earn a total of 57.00 from holding PHX Minerals or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GeoPark vs. PHX Minerals
Performance |
| Timeline |
| GeoPark |
| PHX Minerals |
GeoPark and PHX Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeoPark and PHX Minerals
The main advantage of trading using opposite GeoPark and PHX Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoPark position performs unexpectedly, PHX Minerals 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 PHX Minerals will offset losses from the drop in PHX Minerals' long position.| GeoPark vs. Evolution Petroleum | GeoPark vs. Granite Ridge Resources | GeoPark vs. PHX Minerals | GeoPark vs. California Resources Corp |
| PHX Minerals vs. Devon Energy | PHX Minerals vs. ConocoPhillips | PHX Minerals vs. Occidental Petroleum | PHX Minerals vs. Permian Resources |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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