Correlation Between Crescent Energy and Granite Ridge

Can any of the company-specific risk be diversified away by investing in both Crescent Energy 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 Crescent Energy and Granite Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crescent Energy Co and Granite Ridge Resources, you can compare the effects of market volatilities on Crescent Energy 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 Crescent Energy with a short position of Granite Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Energy and Granite Ridge.

Diversification Opportunities for Crescent Energy and Granite Ridge

0.78

Correlation Coefficient

Crescent Energy  Granite Ridge

Poor diversification

The 3 months correlation between Crescent and Granite is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co 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 Crescent 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 Crescent Energy Co 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 Crescent Energy i.e., Crescent Energy and Granite Ridge go up and down completely randomly.

Pair Corralation between Crescent Energy and Granite Ridge

Given the investment horizon of 90 days Crescent Energy Co is expected to under-perform the Granite Ridge. In addition to that, Crescent Energy is 1.2 times more volatile than Granite Ridge Resources. It trades about -0.16 of its total potential returns per unit of risk. Granite Ridge Resources is currently generating about 0.03 per unit of volatility. If you would invest  607.00  in Granite Ridge Resources on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Granite Ridge Resources or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Crescent Energy Co  vs.  Granite Ridge Resources

Crescent Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Granite Ridge Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Ridge Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Granite Ridge is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crescent Energy and Granite Ridge

The main advantage of trading using opposite Crescent Energy and Granite Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Energy 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.

The idea behind Crescent Energy Co and Granite Ridge Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.