Correlation Between Gran Tierra and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and EOG Resources 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 EOG Resources 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 EOG Resources, you can compare the effects of market volatilities on Gran Tierra and EOG Resources 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 EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and EOG Resources.
Diversification Opportunities for Gran Tierra and EOG Resources
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gran and EOG is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources 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 EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Gran Tierra i.e., Gran Tierra and EOG Resources go up and down completely randomly.
Pair Corralation between Gran Tierra and EOG Resources
Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 3.02 times more return on investment than EOG Resources. However, Gran Tierra is 3.02 times more volatile than EOG Resources. It trades about 0.1 of its potential returns per unit of risk. EOG Resources is currently generating about -0.45 per unit of risk. If you would invest 624.00 in Gran Tierra Energy on September 19, 2024 and sell it today you would earn a total of 35.00 from holding Gran Tierra Energy or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gran Tierra Energy vs. EOG Resources
Performance |
| Timeline |
| Gran Tierra Energy |
| EOG Resources |
Gran Tierra and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and EOG Resources
The main advantage of trading using opposite Gran Tierra and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, EOG Resources 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 EOG Resources will offset losses from the drop in EOG Resources' long position.| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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