Correlation Between XXL Energy and GeoPark
Can any of the company-specific risk be diversified away by investing in both XXL 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 XXL Energy and GeoPark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL Energy Corp and GeoPark, you can compare the effects of market volatilities on XXL 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 XXL Energy with a short position of GeoPark. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL Energy and GeoPark.
Diversification Opportunities for XXL Energy and GeoPark
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between XXL and GeoPark is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding XXL Energy Corp and GeoPark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoPark and XXL 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 XXL Energy Corp 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 XXL Energy i.e., XXL Energy and GeoPark go up and down completely randomly.
Pair Corralation between XXL Energy and GeoPark
If you would invest 819.00 in GeoPark on August 31, 2024 and sell it today you would earn a total of 89.00 from holding GeoPark or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XXL Energy Corp vs. GeoPark
Performance |
| Timeline |
| XXL Energy Corp |
| GeoPark |
XXL Energy and GeoPark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL Energy and GeoPark
The main advantage of trading using opposite XXL Energy and GeoPark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL 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.| XXL Energy vs. Petroleo Brasileiro Petrobras | XXL Energy vs. Equinor ASA ADR | XXL Energy vs. Eni SpA ADR | XXL Energy vs. YPF Sociedad Anonima |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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