Correlation Between Gulf Coast and San Leon
Can any of the company-specific risk be diversified away by investing in both Gulf Coast and San Leon 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 Coast and San Leon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Coast and San Leon Energy, you can compare the effects of market volatilities on Gulf Coast and San Leon 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 Coast with a short position of San Leon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Coast and San Leon.
Diversification Opportunities for Gulf Coast and San Leon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gulf and San is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Coast and San Leon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Leon Energy and Gulf Coast 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 Coast are associated (or correlated) with San Leon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Leon Energy has no effect on the direction of Gulf Coast i.e., Gulf Coast and San Leon go up and down completely randomly.
Pair Corralation between Gulf Coast and San Leon
Assuming the 90 days horizon Gulf Coast is expected to generate 3.64 times more return on investment than San Leon. However, Gulf Coast is 3.64 times more volatile than San Leon Energy. It trades about 0.03 of its potential returns per unit of risk. San Leon Energy is currently generating about -0.02 per unit of risk. If you would invest 3.75 in Gulf Coast on August 24, 2024 and sell it today you would lose (1.95) from holding Gulf Coast or give up 52.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Coast vs. San Leon Energy
Performance |
| Timeline |
| Gulf Coast |
| San Leon Energy |
Gulf Coast and San Leon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Coast and San Leon
The main advantage of trading using opposite Gulf Coast and San Leon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Coast position performs unexpectedly, San Leon 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 San Leon will offset losses from the drop in San Leon's long position.| Gulf Coast vs. San Leon Energy | Gulf Coast vs. Enwell Energy plc | Gulf Coast vs. Dno ASA | Gulf Coast vs. PetroShale |
| San Leon vs. Permian Resources | San Leon vs. Devon Energy | San Leon vs. EOG Resources | San Leon 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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