Correlation Between Freehold Royalties and Gulf Keystone
Can any of the company-specific risk be diversified away by investing in both Freehold Royalties and Gulf Keystone 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 Freehold Royalties and Gulf Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freehold Royalties and Gulf Keystone Petroleum, you can compare the effects of market volatilities on Freehold Royalties and Gulf Keystone 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 Freehold Royalties with a short position of Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freehold Royalties and Gulf Keystone.
Diversification Opportunities for Freehold Royalties and Gulf Keystone
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Freehold and Gulf is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Freehold Royalties and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum and Freehold Royalties 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 Freehold Royalties are associated (or correlated) with Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of Freehold Royalties i.e., Freehold Royalties and Gulf Keystone go up and down completely randomly.
Pair Corralation between Freehold Royalties and Gulf Keystone
Assuming the 90 days horizon Freehold Royalties is expected to generate 26.32 times less return on investment than Gulf Keystone. But when comparing it to its historical volatility, Freehold Royalties is 3.49 times less risky than Gulf Keystone. It trades about 0.02 of its potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 172.00 in Gulf Keystone Petroleum on December 29, 2024 and sell it today you would earn a total of 90.00 from holding Gulf Keystone Petroleum or generate 52.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 91.8% |
Values | Daily Returns |
Freehold Royalties vs. Gulf Keystone Petroleum
Performance |
Timeline |
Freehold Royalties |
Gulf Keystone Petroleum |
Freehold Royalties and Gulf Keystone Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freehold Royalties and Gulf Keystone
The main advantage of trading using opposite Freehold Royalties and Gulf Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freehold Royalties position performs unexpectedly, Gulf Keystone 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 Gulf Keystone will offset losses from the drop in Gulf Keystone's long position.Freehold Royalties vs. PrairieSky Royalty | Freehold Royalties vs. Tamarack Valley Energy | Freehold Royalties vs. MEG Energy Corp | Freehold Royalties vs. Tourmaline Oil Corp |
Gulf Keystone vs. San Leon Energy | Gulf Keystone vs. Enwell Energy plc | Gulf Keystone vs. Dno ASA | Gulf Keystone vs. Questerre Energy |
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..
Other Complementary Tools
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing |