Correlation Between Gran Tierra and Battalion Oil
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Battalion Oil 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 Battalion Oil 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 Battalion Oil Corp, you can compare the effects of market volatilities on Gran Tierra and Battalion Oil 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 Battalion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Battalion Oil.
Diversification Opportunities for Gran Tierra and Battalion Oil
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gran and Battalion is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil 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 Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Gran Tierra i.e., Gran Tierra and Battalion Oil go up and down completely randomly.
Pair Corralation between Gran Tierra and Battalion Oil
Considering the 90-day investment horizon Gran Tierra is expected to generate 1.94 times less return on investment than Battalion Oil. But when comparing it to its historical volatility, Gran Tierra Energy is 3.07 times less risky than Battalion Oil. It trades about 0.02 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 636.00 in Battalion Oil Corp on September 12, 2024 and sell it today you would lose (318.50) from holding Battalion Oil Corp or give up 50.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gran Tierra Energy vs. Battalion Oil Corp
Performance |
| Timeline |
| Gran Tierra Energy |
| Battalion Oil Corp |
Gran Tierra and Battalion Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and Battalion Oil
The main advantage of trading using opposite Gran Tierra and Battalion Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Battalion Oil 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 Battalion Oil will offset losses from the drop in Battalion Oil's long position.| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
| Battalion Oil vs. Evolution Petroleum | Battalion Oil vs. Ring Energy | Battalion Oil vs. Gran Tierra Energy | Battalion Oil 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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