Correlation Between Greenfire Resources and Evolution Petroleum
Can any of the company-specific risk be diversified away by investing in both Greenfire Resources and Evolution Petroleum 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 Greenfire Resources and Evolution Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenfire Resources and Evolution Petroleum, you can compare the effects of market volatilities on Greenfire Resources and Evolution Petroleum 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 Greenfire Resources with a short position of Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenfire Resources and Evolution Petroleum.
Diversification Opportunities for Greenfire Resources and Evolution Petroleum
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Greenfire and Evolution is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Greenfire Resources and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum and Greenfire Resources 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 Greenfire Resources are associated (or correlated) with Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of Greenfire Resources i.e., Greenfire Resources and Evolution Petroleum go up and down completely randomly.
Pair Corralation between Greenfire Resources and Evolution Petroleum
Considering the 90-day investment horizon Greenfire Resources is expected to under-perform the Evolution Petroleum. In addition to that, Greenfire Resources is 1.38 times more volatile than Evolution Petroleum. It trades about -0.13 of its total potential returns per unit of risk. Evolution Petroleum is currently generating about -0.11 per unit of volatility. If you would invest 568.00 in Evolution Petroleum on December 2, 2024 and sell it today you would lose (64.00) from holding Evolution Petroleum or give up 11.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Greenfire Resources vs. Evolution Petroleum
Performance |
Timeline |
Greenfire Resources |
Evolution Petroleum |
Greenfire Resources and Evolution Petroleum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Greenfire Resources and Evolution Petroleum
The main advantage of trading using opposite Greenfire Resources and Evolution Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenfire Resources position performs unexpectedly, Evolution Petroleum 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 Evolution Petroleum will offset losses from the drop in Evolution Petroleum's long position.Greenfire Resources vs. Acumen Pharmaceuticals | Greenfire Resources vs. Catalyst Pharmaceuticals | Greenfire Resources vs. Douglas Emmett | Greenfire Resources vs. Autohome |
Evolution Petroleum vs. GeoPark | Evolution Petroleum vs. Granite Ridge Resources | Evolution Petroleum vs. PHX Minerals | Evolution Petroleum 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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