Correlation Between Granite Ridge and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both Granite Ridge and Coterra 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 Granite Ridge and Coterra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Ridge Resources and Coterra Energy, you can compare the effects of market volatilities on Granite Ridge and Coterra 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 Granite Ridge with a short position of Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Coterra Energy.
Diversification Opportunities for Granite Ridge and Coterra Energy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Granite and Coterra is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy and Granite Ridge 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 Granite Ridge Resources are associated (or correlated) with Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Granite Ridge i.e., Granite Ridge and Coterra Energy go up and down completely randomly.
Pair Corralation between Granite Ridge and Coterra Energy
Given the investment horizon of 90 days Granite Ridge is expected to generate 1.39 times less return on investment than Coterra Energy. In addition to that, Granite Ridge is 1.05 times more volatile than Coterra Energy. It trades about 0.19 of its total potential returns per unit of risk. Coterra Energy is currently generating about 0.28 per unit of volatility. If you would invest 2,372 in Coterra Energy on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Coterra Energy or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Ridge Resources vs. Coterra Energy
Performance |
| Timeline |
| Granite Ridge Resources |
| Coterra Energy |
Granite Ridge and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and Coterra Energy
The main advantage of trading using opposite Granite Ridge and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge position performs unexpectedly, Coterra 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 Coterra Energy will offset losses from the drop in Coterra Energy's long position.| Granite Ridge vs. Epsilon Energy | Granite Ridge vs. Gulfport Energy Operating | Granite Ridge vs. North European Oil | Granite Ridge vs. PHX Minerals |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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