Correlation Between Granite Ridge and Empire Petroleum
Can any of the company-specific risk be diversified away by investing in both Granite Ridge and Empire Petroleum 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 Empire Petroleum 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 Empire Petroleum Corp, you can compare the effects of market volatilities on Granite Ridge and Empire Petroleum 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 Empire Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Empire Petroleum.
Diversification Opportunities for Granite Ridge and Empire Petroleum
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Granite and Empire is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Empire Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Petroleum Corp 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 Empire Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Petroleum Corp has no effect on the direction of Granite Ridge i.e., Granite Ridge and Empire Petroleum go up and down completely randomly.
Pair Corralation between Granite Ridge and Empire Petroleum
Given the investment horizon of 90 days Granite Ridge is expected to generate 1.18 times less return on investment than Empire Petroleum. But when comparing it to its historical volatility, Granite Ridge Resources is 2.1 times less risky than Empire Petroleum. It trades about 0.29 of its potential returns per unit of risk. Empire Petroleum Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 518.00 in Empire Petroleum Corp on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Empire Petroleum Corp or generate 13.71% 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. Empire Petroleum Corp
Performance |
| Timeline |
| Granite Ridge Resources |
| Empire Petroleum Corp |
Granite Ridge and Empire Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and Empire Petroleum
The main advantage of trading using opposite Granite Ridge and Empire Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge position performs unexpectedly, Empire Petroleum 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 Empire Petroleum will offset losses from the drop in Empire Petroleum's long position.| Granite Ridge vs. Devon Energy | Granite Ridge vs. ConocoPhillips | Granite Ridge vs. Occidental Petroleum | Granite Ridge vs. Permian Resources |
| Empire Petroleum vs. Devon Energy | Empire Petroleum vs. ConocoPhillips | Empire Petroleum vs. Occidental Petroleum | Empire Petroleum 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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