Correlation Between Gran Tierra and Alamo Energy
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Alamo 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 Alamo 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 Alamo Energy Corp, you can compare the effects of market volatilities on Gran Tierra and Alamo 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 Alamo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Alamo Energy.
Diversification Opportunities for Gran Tierra and Alamo Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gran and Alamo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Alamo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo 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 Alamo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Energy Corp has no effect on the direction of Gran Tierra i.e., Gran Tierra and Alamo Energy go up and down completely randomly.
Pair Corralation between Gran Tierra and Alamo Energy
Considering the 90-day investment horizon Gran Tierra is expected to generate 67.18 times less return on investment than Alamo Energy. But when comparing it to its historical volatility, Gran Tierra Energy is 19.95 times less risky than Alamo Energy. It trades about 0.02 of its potential returns per unit of risk. Alamo Energy Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Alamo Energy Corp on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Alamo Energy Corp or generate 0.0% 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. Alamo Energy Corp
Performance |
| Timeline |
| Gran Tierra Energy |
| Alamo Energy Corp |
Gran Tierra and Alamo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and Alamo Energy
The main advantage of trading using opposite Gran Tierra and Alamo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Alamo 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 Alamo Energy will offset losses from the drop in Alamo Energy's long position.| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
| Alamo Energy vs. AER Energy Resources | Alamo Energy vs. Altura Energy | Alamo Energy vs. Arete Industries | Alamo Energy vs. Strat Petroleum |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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