Correlation Between GeoPark and CNX Resources

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

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

Diversification Opportunities for GeoPark and CNX Resources

0.32

Correlation Coefficient

GeoPark  CNX Resources

Weak diversification

The 3 months correlation between GeoPark and CNX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and GeoPark 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 GeoPark are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of GeoPark i.e., GeoPark and CNX Resources go up and down completely randomly.

Pair Corralation between GeoPark and CNX Resources

Given the investment horizon of 90 days GeoPark is expected to generate 1.41 times less return on investment than CNX Resources. In addition to that, GeoPark is 1.3 times more volatile than CNX Resources Corp. It trades about 0.13 of its total potential returns per unit of risk. CNX Resources Corp is currently generating about 0.24 per unit of volatility. If you would invest  3,257  in CNX Resources Corp on August 30, 2024 and sell it today you would earn a total of  777.00  from holding CNX Resources Corp or generate 23.86% return on investment over 90 days.

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

GeoPark  vs.  CNX Resources Corp

GeoPark

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GeoPark are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, GeoPark is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

CNX Resources Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GeoPark and CNX Resources

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

The idea behind GeoPark and CNX Resources Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.