Correlation Between Granite Ridge and Evolution Petroleum
Can any of the company-specific risk be diversified away by investing in both Granite Ridge and Evolution 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 Evolution 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 Evolution Petroleum, you can compare the effects of market volatilities on Granite Ridge and Evolution 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 Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Evolution Petroleum.
Diversification Opportunities for Granite Ridge and Evolution Petroleum
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and Evolution is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum 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 Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of Granite Ridge i.e., Granite Ridge and Evolution Petroleum go up and down completely randomly.
Pair Corralation between Granite Ridge and Evolution Petroleum
Given the investment horizon of 90 days Granite Ridge is expected to generate 1.0 times less return on investment than Evolution Petroleum. In addition to that, Granite Ridge is 1.02 times more volatile than Evolution Petroleum. It trades about 0.29 of its total potential returns per unit of risk. Evolution Petroleum is currently generating about 0.29 per unit of volatility. If you would invest 519.00 in Evolution Petroleum on August 28, 2024 and sell it today you would earn a total of 67.00 from holding Evolution Petroleum or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Ridge Resources vs. Evolution Petroleum
Performance |
| Timeline |
| Granite Ridge Resources |
| Evolution Petroleum |
Granite Ridge and Evolution Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and Evolution Petroleum
The main advantage of trading using opposite Granite Ridge and Evolution Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge position performs unexpectedly, Evolution 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 Evolution Petroleum will offset losses from the drop in Evolution Petroleum's long position.| Granite Ridge vs. Devon Energy | Granite Ridge vs. ConocoPhillips | Granite Ridge vs. Occidental Petroleum | Granite Ridge vs. Permian Resources |
| Evolution Petroleum vs. Devon Energy | Evolution Petroleum vs. ConocoPhillips | Evolution Petroleum vs. Occidental Petroleum | Evolution 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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