Correlation Between Tullow Oil and GulfSlope Energy
Can any of the company-specific risk be diversified away by investing in both Tullow Oil and GulfSlope Energy 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 Tullow Oil and GulfSlope Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tullow Oil PLC and GulfSlope Energy, you can compare the effects of market volatilities on Tullow Oil and GulfSlope Energy 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 Tullow Oil with a short position of GulfSlope Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tullow Oil and GulfSlope Energy.
Diversification Opportunities for Tullow Oil and GulfSlope Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tullow and GulfSlope is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tullow Oil PLC and GulfSlope Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GulfSlope Energy and Tullow 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 Tullow Oil PLC are associated (or correlated) with GulfSlope Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GulfSlope Energy has no effect on the direction of Tullow Oil i.e., Tullow Oil and GulfSlope Energy go up and down completely randomly.
Pair Corralation between Tullow Oil and GulfSlope Energy
Assuming the 90 days horizon Tullow Oil is expected to generate 37.41 times less return on investment than GulfSlope Energy. But when comparing it to its historical volatility, Tullow Oil PLC is 8.2 times less risky than GulfSlope Energy. It trades about 0.01 of its potential returns per unit of risk. GulfSlope Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.30 in GulfSlope Energy on September 3, 2024 and sell it today you would lose (0.29) from holding GulfSlope Energy or give up 96.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tullow Oil PLC vs. GulfSlope Energy
Performance |
| Timeline |
| Tullow Oil PLC |
| GulfSlope Energy |
Tullow Oil and GulfSlope Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tullow Oil and GulfSlope Energy
The main advantage of trading using opposite Tullow Oil and GulfSlope Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tullow Oil position performs unexpectedly, GulfSlope Energy 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 GulfSlope Energy will offset losses from the drop in GulfSlope Energy's long position.| Tullow Oil vs. San Leon Energy | Tullow Oil vs. Dno ASA | Tullow Oil vs. PetroShale | Tullow Oil vs. Horizon Oil Limited |
| GulfSlope Energy vs. Seadrill Limited | GulfSlope Energy vs. Noble plc | GulfSlope Energy vs. Borr Drilling | GulfSlope Energy vs. SCOR PK |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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