Correlation Between Northern Oil and Gran Tierra
Can any of the company-specific risk be diversified away by investing in both Northern Oil and Gran Tierra 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 Northern Oil and Gran Tierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Oil Gas and Gran Tierra Energy, you can compare the effects of market volatilities on Northern Oil and Gran Tierra 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 Northern Oil with a short position of Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Oil and Gran Tierra.
Diversification Opportunities for Northern Oil and Gran Tierra
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Gran is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Northern Oil Gas and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra Energy and Northern Oil 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 Northern Oil Gas are associated (or correlated) with Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Northern Oil i.e., Northern Oil and Gran Tierra go up and down completely randomly.
Pair Corralation between Northern Oil and Gran Tierra
Considering the 90-day investment horizon Northern Oil Gas is expected to generate 0.83 times more return on investment than Gran Tierra. However, Northern Oil Gas is 1.21 times less risky than Gran Tierra. It trades about 0.07 of its potential returns per unit of risk. Gran Tierra Energy is currently generating about -0.12 per unit of risk. If you would invest 3,927 in Northern Oil Gas on August 28, 2024 and sell it today you would earn a total of 386.00 from holding Northern Oil Gas or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Oil Gas vs. Gran Tierra Energy
Performance |
| Timeline |
| Northern Oil Gas |
| Gran Tierra Energy |
Northern Oil and Gran Tierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Oil and Gran Tierra
The main advantage of trading using opposite Northern Oil and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Oil position performs unexpectedly, Gran Tierra 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 Gran Tierra will offset losses from the drop in Gran Tierra's long position.| Northern Oil vs. ConocoPhillips | Northern Oil vs. Occidental Petroleum | Northern Oil vs. EOG Resources | Northern Oil vs. Coterra Energy |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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