Correlation Between Gran Tierra and Diversified Energy
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Diversified 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 Diversified 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 Diversified Energy, you can compare the effects of market volatilities on Gran Tierra and Diversified 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 Diversified Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Diversified Energy.
Diversification Opportunities for Gran Tierra and Diversified Energy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gran and Diversified is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Diversified Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Energy 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 Diversified Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Energy has no effect on the direction of Gran Tierra i.e., Gran Tierra and Diversified Energy go up and down completely randomly.
Pair Corralation between Gran Tierra and Diversified Energy
Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 1.09 times more return on investment than Diversified Energy. However, Gran Tierra is 1.09 times more volatile than Diversified Energy. It trades about 0.0 of its potential returns per unit of risk. Diversified Energy is currently generating about -0.01 per unit of risk. If you would invest 918.00 in Gran Tierra Energy on September 2, 2024 and sell it today you would lose (230.00) from holding Gran Tierra Energy or give up 25.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.79% |
| Values | Daily Returns |
Gran Tierra Energy vs. Diversified Energy
Performance |
| Timeline |
| Gran Tierra Energy |
| Diversified Energy |
Gran Tierra and Diversified Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and Diversified Energy
The main advantage of trading using opposite Gran Tierra and Diversified Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Diversified 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 Diversified Energy will offset losses from the drop in Diversified Energy's long position.| Gran Tierra vs. Epsilon Energy | Gran Tierra vs. Crescent Energy Co | Gran Tierra vs. Evolution Petroleum | Gran Tierra vs. XXL Energy Corp |
| Diversified Energy vs. Epsilon Energy | Diversified Energy vs. Crescent Energy Co | Diversified Energy vs. Evolution Petroleum | Diversified Energy vs. XXL Energy Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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