Correlation Between Gibson Energy and Mullen

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

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

Diversification Opportunities for Gibson Energy and Mullen

0.91

Correlation Coefficient

Gibson Energy  Mullen

Almost no diversification

The 3 months correlation between Gibson and Mullen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gibson Energy and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group and Gibson 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 Gibson Energy are associated (or correlated) with Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Gibson Energy i.e., Gibson Energy and Mullen go up and down completely randomly.

Pair Corralation between Gibson Energy and Mullen

Assuming the 90 days trading horizon Gibson Energy is expected to generate 1.05 times more return on investment than Mullen. However, Gibson Energy is 1.05 times more volatile than Mullen Group. It trades about -0.07 of its potential returns per unit of risk. Mullen Group is currently generating about -0.12 per unit of risk. If you would invest  2,443  in Gibson Energy on December 30, 2024 and sell it today you would lose (174.00) from holding Gibson Energy or give up 7.12% of portfolio value over 90 days.

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

Gibson Energy  vs.  Mullen Group

Gibson Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gibson Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mullen Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mullen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Gibson Energy and Mullen

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

The idea behind Gibson Energy and Mullen Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..