Correlation Between Gran Tierra and Frontera Energy
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Frontera 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 Gran Tierra and Frontera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gran Tierra Energy and Frontera Energy Corp, you can compare the effects of market volatilities on Gran Tierra and Frontera 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 Gran Tierra with a short position of Frontera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Frontera Energy.
Diversification Opportunities for Gran Tierra and Frontera Energy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gran and Frontera is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Frontera Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontera Energy Corp and Gran Tierra 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 Gran Tierra Energy are associated (or correlated) with Frontera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontera Energy Corp has no effect on the direction of Gran Tierra i.e., Gran Tierra and Frontera Energy go up and down completely randomly.
Pair Corralation between Gran Tierra and Frontera Energy
Assuming the 90 days trading horizon Gran Tierra Energy is expected to generate 2.16 times more return on investment than Frontera Energy. However, Gran Tierra is 2.16 times more volatile than Frontera Energy Corp. It trades about 0.12 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about 0.14 per unit of risk. If you would invest 877.00 in Gran Tierra Energy on August 30, 2024 and sell it today you would earn a total of 70.00 from holding Gran Tierra Energy or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gran Tierra Energy vs. Frontera Energy Corp
Performance |
| Timeline |
| Gran Tierra Energy |
| Frontera Energy Corp |
Gran Tierra and Frontera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and Frontera Energy
The main advantage of trading using opposite Gran Tierra and Frontera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Frontera 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 Frontera Energy will offset losses from the drop in Frontera Energy's long position.| Gran Tierra vs. NuVista Energy | Gran Tierra vs. Surge Energy | Gran Tierra vs. Birchcliff Energy | Gran Tierra vs. Kelt Exploration |
| Frontera Energy vs. CGX Energy | Frontera Energy vs. Parex Resources | Frontera Energy vs. Gran Tierra Energy | Frontera Energy vs. Secure Energy Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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