Correlation Between GeoPark and PHX Minerals

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

By analyzing existing cross correlation between GeoPark and PHX Minerals, you can compare the effects of market volatilities on GeoPark and PHX Minerals 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 PHX Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and PHX Minerals.

Diversification Opportunities for GeoPark and PHX Minerals

0.1

Correlation Coefficient

GeoPark  PHX Minerals

Average diversification

The 3 months correlation between GeoPark and PHX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals 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 PHX Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Minerals has no effect on the direction of GeoPark i.e., GeoPark and PHX Minerals go up and down completely randomly.

Pair Corralation between GeoPark and PHX Minerals

Given the investment horizon of 90 days GeoPark is expected to under-perform the PHX Minerals. In addition to that, GeoPark is 1.69 times more volatile than PHX Minerals. It trades about -0.03 of its total potential returns per unit of risk. PHX Minerals is currently generating about 0.02 per unit of volatility. If you would invest  393.00  in PHX Minerals on December 28, 2024 and sell it today you would earn a total of  5.00  from holding PHX Minerals or generate 1.27% return on investment over 90 days.

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

GeoPark  vs.  PHX Minerals

GeoPark

Risk-Adjusted Performance

Very Weak

Over the last 90 days GeoPark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PHX Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, PHX Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GeoPark and PHX Minerals

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

The idea behind GeoPark and PHX Minerals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.