Correlation Between PrimeEnergy and Granite Ridge
Can any of the company-specific risk be diversified away by investing in both PrimeEnergy and Granite Ridge 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 PrimeEnergy and Granite Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PrimeEnergy and Granite Ridge Resources, you can compare the effects of market volatilities on PrimeEnergy and Granite Ridge 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 PrimeEnergy with a short position of Granite Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of PrimeEnergy and Granite Ridge.
Diversification Opportunities for PrimeEnergy and Granite Ridge
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PrimeEnergy and Granite is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PrimeEnergy and Granite Ridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Ridge Resources and PrimeEnergy 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 PrimeEnergy are associated (or correlated) with Granite Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Ridge Resources has no effect on the direction of PrimeEnergy i.e., PrimeEnergy and Granite Ridge go up and down completely randomly.
Pair Corralation between PrimeEnergy and Granite Ridge
Given the investment horizon of 90 days PrimeEnergy is expected to generate 1.68 times more return on investment than Granite Ridge. However, PrimeEnergy is 1.68 times more volatile than Granite Ridge Resources. It trades about 0.32 of its potential returns per unit of risk. Granite Ridge Resources is currently generating about 0.29 per unit of risk. If you would invest 16,301 in PrimeEnergy on August 28, 2024 and sell it today you would earn a total of 4,089 from holding PrimeEnergy or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PrimeEnergy vs. Granite Ridge Resources
Performance |
| Timeline |
| PrimeEnergy |
| Granite Ridge Resources |
PrimeEnergy and Granite Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PrimeEnergy and Granite Ridge
The main advantage of trading using opposite PrimeEnergy and Granite Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PrimeEnergy position performs unexpectedly, Granite Ridge 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 Granite Ridge will offset losses from the drop in Granite Ridge's long position.| PrimeEnergy vs. Epsilon Energy | PrimeEnergy vs. Crescent Energy Co | PrimeEnergy vs. Evolution Petroleum | PrimeEnergy vs. MorningStar Partners, LP |
| Granite Ridge vs. Devon Energy | Granite Ridge vs. ConocoPhillips | Granite Ridge vs. Occidental Petroleum | Granite Ridge vs. Permian Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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