Correlation Between Gulfport Energy and Invictus Energy

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

Diversification Opportunities for Gulfport Energy and Invictus Energy

-0.58

Correlation Coefficient

Gulfport Energy  Invictus Energy

Excellent diversification

The 3 months correlation between Gulfport and Invictus is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gulfport Energy Operating and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy 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 Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of Gulfport Energy i.e., Gulfport Energy and Invictus Energy go up and down completely randomly.

Pair Corralation between Gulfport Energy and Invictus Energy

Given the investment horizon of 90 days Gulfport Energy Operating is expected to generate 0.28 times more return on investment than Invictus Energy. However, Gulfport Energy Operating is 3.55 times less risky than Invictus Energy. It trades about 0.08 of its potential returns per unit of risk. Invictus Energy Limited is currently generating about 0.02 per unit of risk. If you would invest  8,041  in Gulfport Energy Operating on October 4, 2024 and sell it today you would earn a total of  10,349  from holding Gulfport Energy Operating or generate 128.7% return on investment over 90 days.

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

Gulfport Energy Operating  vs.  Invictus Energy Limited

Gulfport Energy Operating

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulfport Energy Operating are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gulfport Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Invictus Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invictus Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Invictus Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gulfport Energy and Invictus Energy

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

The idea behind Gulfport Energy Operating and Invictus Energy Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.