Correlation Between Gran Tierra and Ring Energy
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Ring 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 Ring 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 Ring Energy, you can compare the effects of market volatilities on Gran Tierra and Ring 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 Ring Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Ring Energy.
Diversification Opportunities for Gran Tierra and Ring Energy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gran and Ring is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring 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 Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of Gran Tierra i.e., Gran Tierra and Ring Energy go up and down completely randomly.
Pair Corralation between Gran Tierra and Ring Energy
Considering the 90-day investment horizon Gran Tierra Energy is expected to under-perform the Ring Energy. But the stock apears to be less risky and, when comparing its historical volatility, Gran Tierra Energy is 1.44 times less risky than Ring Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Ring Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 154.00 in Ring Energy on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Ring Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gran Tierra Energy vs. Ring Energy
Performance |
| Timeline |
| Gran Tierra Energy |
| Ring Energy |
Gran Tierra and Ring Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gran Tierra and Ring Energy
The main advantage of trading using opposite Gran Tierra and Ring Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Ring 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 Ring Energy will offset losses from the drop in Ring Energy's long position.| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
| Ring Energy vs. ConocoPhillips | Ring Energy vs. Occidental Petroleum | Ring Energy vs. EOG Resources | Ring Energy vs. Coterra Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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