Correlation Between Granite Ridge and North European
Can any of the company-specific risk be diversified away by investing in both Granite Ridge and North European 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 North European 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 North European Oil, you can compare the effects of market volatilities on Granite Ridge and North European 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 North European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and North European.
Diversification Opportunities for Granite Ridge and North European
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and North is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and North European Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North European Oil 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 North European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North European Oil has no effect on the direction of Granite Ridge i.e., Granite Ridge and North European go up and down completely randomly.
Pair Corralation between Granite Ridge and North European
Given the investment horizon of 90 days Granite Ridge Resources is expected to generate 0.8 times more return on investment than North European. However, Granite Ridge Resources is 1.24 times less risky than North European. It trades about 0.01 of its potential returns per unit of risk. North European Oil is currently generating about -0.04 per unit of risk. If you would invest 770.00 in Granite Ridge Resources on August 24, 2024 and sell it today you would lose (109.00) from holding Granite Ridge Resources or give up 14.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Ridge Resources vs. North European Oil
Performance |
| Timeline |
| Granite Ridge Resources |
| North European Oil |
Granite Ridge and North European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and North European
The main advantage of trading using opposite Granite Ridge and North European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge position performs unexpectedly, North European 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 North European will offset losses from the drop in North European'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 |
| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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