Correlation Between Gulfport Energy and Evolution Petroleum

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

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

Diversification Opportunities for Gulfport Energy and Evolution Petroleum

0.13

Correlation Coefficient

Gulfport Energy  Evolution Petroleum

Average diversification

The 3 months correlation between Gulfport and Evolution is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gulfport Energy Operating and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum and Gulfport 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 Gulfport Energy Operating 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 Gulfport Energy i.e., Gulfport Energy and Evolution Petroleum go up and down completely randomly.

Pair Corralation between Gulfport Energy and Evolution Petroleum

Given the investment horizon of 90 days Gulfport Energy Operating is expected to generate 1.27 times more return on investment than Evolution Petroleum. However, Gulfport Energy is 1.27 times more volatile than Evolution Petroleum. It trades about 0.02 of its potential returns per unit of risk. Evolution Petroleum is currently generating about -0.13 per unit of risk. If you would invest  17,580  in Gulfport Energy Operating on November 29, 2024 and sell it today you would earn a total of  219.00  from holding Gulfport Energy Operating or generate 1.25% return on investment over 90 days.

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

Gulfport Energy Operating  vs.  Evolution Petroleum

Gulfport Energy Operating

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gulfport Energy Operating are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Gulfport Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Evolution Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolution Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gulfport Energy and Evolution Petroleum

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

The idea behind Gulfport Energy Operating and Evolution Petroleum 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.