Correlation Between Crescent Energy and Gran Tierra

Can any of the company-specific risk be diversified away by investing in both Crescent Energy and Gran Tierra 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 Gran Tierra 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 Gran Tierra Energy, you can compare the effects of market volatilities on Crescent Energy and Gran Tierra 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 Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Energy and Gran Tierra.

Diversification Opportunities for Crescent Energy and Gran Tierra

0.05

Correlation Coefficient

Crescent Energy  Gran Tierra

Significant diversification

The 3 months correlation between Crescent and Gran is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra Energy 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 Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Crescent Energy i.e., Crescent Energy and Gran Tierra go up and down completely randomly.

Pair Corralation between Crescent Energy and Gran Tierra

Given the investment horizon of 90 days Crescent Energy Co is expected to generate 0.86 times more return on investment than Gran Tierra. However, Crescent Energy Co is 1.16 times less risky than Gran Tierra. It trades about 0.18 of its potential returns per unit of risk. Gran Tierra Energy is currently generating about 0.03 per unit of risk. If you would invest  1,135  in Crescent Energy Co on September 3, 2024 and sell it today you would earn a total of  352.00  from holding Crescent Energy Co or generate 31.01% return on investment over 90 days.

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

Crescent Energy Co  vs.  Gran Tierra Energy

Crescent Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Energy Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Crescent Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Gran Tierra Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gran Tierra Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Gran Tierra is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Crescent Energy and Gran Tierra

The main advantage of trading using opposite Crescent Energy and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Energy position performs unexpectedly, Gran Tierra 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 Gran Tierra will offset losses from the drop in Gran Tierra's long position.

The idea behind Crescent Energy Co and Gran Tierra Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.