Correlation Between Gran Tierra and Magnolia Oil
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Magnolia 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 Magnolia 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 Magnolia Oil Gas, you can compare the effects of market volatilities on Gran Tierra and Magnolia 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 Magnolia Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Magnolia Oil.
Diversification Opportunities for Gran Tierra and Magnolia Oil
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gran and Magnolia is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Magnolia Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnolia Oil Gas 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 Magnolia Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnolia Oil Gas has no effect on the direction of Gran Tierra i.e., Gran Tierra and Magnolia Oil go up and down completely randomly.
Pair Corralation between Gran Tierra and Magnolia Oil
Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 2.12 times more return on investment than Magnolia Oil. However, Gran Tierra is 2.12 times more volatile than Magnolia Oil Gas. It trades about 0.15 of its potential returns per unit of risk. Magnolia Oil Gas is currently generating about -0.15 per unit of risk. If you would invest 609.00 in Gran Tierra Energy on September 13, 2024 and sell it today you would earn a total of 61.00 from holding Gran Tierra Energy or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gran Tierra Energy vs. Magnolia Oil Gas
Performance |
| Timeline |
| Gran Tierra Energy |
| Magnolia Oil Gas |
Gran Tierra and Magnolia Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and Magnolia Oil
The main advantage of trading using opposite Gran Tierra and Magnolia Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Magnolia 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 Magnolia Oil will offset losses from the drop in Magnolia Oil's long position.| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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