Correlation Between Gulf Keystone and EQT
Can any of the company-specific risk be diversified away by investing in both Gulf Keystone and EQT 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 Gulf Keystone and EQT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Keystone Petroleum and EQT Corporation, you can compare the effects of market volatilities on Gulf Keystone and EQT 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 Gulf Keystone with a short position of EQT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Keystone and EQT.
Diversification Opportunities for Gulf Keystone and EQT
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gulf and EQT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Keystone Petroleum and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation and Gulf Keystone 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 Gulf Keystone Petroleum are associated (or correlated) with EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of Gulf Keystone i.e., Gulf Keystone and EQT go up and down completely randomly.
Pair Corralation between Gulf Keystone and EQT
Assuming the 90 days horizon Gulf Keystone Petroleum is expected to generate 3.57 times more return on investment than EQT. However, Gulf Keystone is 3.57 times more volatile than EQT Corporation. It trades about 0.03 of its potential returns per unit of risk. EQT Corporation is currently generating about 0.04 per unit of risk. If you would invest 251.00 in Gulf Keystone Petroleum on August 30, 2024 and sell it today you would lose (72.00) from holding Gulf Keystone Petroleum or give up 28.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gulf Keystone Petroleum vs. EQT Corp.
Performance |
| Timeline |
| Gulf Keystone Petroleum |
| EQT Corporation |
Gulf Keystone and EQT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Keystone and EQT
The main advantage of trading using opposite Gulf Keystone and EQT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Keystone position performs unexpectedly, EQT 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 EQT will offset losses from the drop in EQT's long position.| Gulf Keystone vs. San Leon Energy | Gulf Keystone vs. Enwell Energy plc | Gulf Keystone vs. Dno ASA | Gulf Keystone vs. Questerre Energy |
| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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