Correlation Between Obsidian Energy and GeoPark
Can any of the company-specific risk be diversified away by investing in both Obsidian Energy and GeoPark 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 Obsidian Energy and GeoPark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Obsidian Energy and GeoPark, you can compare the effects of market volatilities on Obsidian Energy and GeoPark 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 Obsidian Energy with a short position of GeoPark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Obsidian Energy and GeoPark.
Diversification Opportunities for Obsidian Energy and GeoPark
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Obsidian and GeoPark is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Obsidian Energy and GeoPark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoPark and Obsidian Energy 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 Obsidian Energy are associated (or correlated) with GeoPark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoPark has no effect on the direction of Obsidian Energy i.e., Obsidian Energy and GeoPark go up and down completely randomly.
Pair Corralation between Obsidian Energy and GeoPark
Considering the 90-day investment horizon Obsidian Energy is expected to generate 2.03 times less return on investment than GeoPark. In addition to that, Obsidian Energy is 1.05 times more volatile than GeoPark. It trades about 0.0 of its total potential returns per unit of risk. GeoPark is currently generating about 0.01 per unit of volatility. If you would invest 980.00 in GeoPark on August 31, 2024 and sell it today you would lose (10.00) from holding GeoPark or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Obsidian Energy vs. GeoPark
Performance |
| Timeline |
| Obsidian Energy |
| GeoPark |
Obsidian Energy and GeoPark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Obsidian Energy and GeoPark
The main advantage of trading using opposite Obsidian Energy and GeoPark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Obsidian Energy position performs unexpectedly, GeoPark 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 GeoPark will offset losses from the drop in GeoPark's long position.| Obsidian Energy vs. Baytex Energy Corp | Obsidian Energy vs. Vermilion Energy | Obsidian Energy vs. Canadian Natural Resources | Obsidian Energy vs. Ovintiv |
| GeoPark vs. Evolution Petroleum | GeoPark vs. Granite Ridge Resources | GeoPark vs. PHX Minerals | GeoPark vs. California Resources Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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