Correlation Between Gran Tierra and Barnwell Industries

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

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

Diversification Opportunities for Gran Tierra and Barnwell Industries

0.06

Correlation Coefficient

Gran Tierra  Barnwell Industries

Significant diversification

The 3 months correlation between Gran and Barnwell is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Barnwell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnwell Industries and Gran Tierra 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 Gran Tierra Energy are associated (or correlated) with Barnwell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnwell Industries has no effect on the direction of Gran Tierra i.e., Gran Tierra and Barnwell Industries go up and down completely randomly.

Pair Corralation between Gran Tierra and Barnwell Industries

Considering the 90-day investment horizon Gran Tierra Energy is expected to under-perform the Barnwell Industries. But the stock apears to be less risky and, when comparing its historical volatility, Gran Tierra Energy is 1.09 times less risky than Barnwell Industries. The stock trades about -0.11 of its potential returns per unit of risk. The Barnwell Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  143.00  in Barnwell Industries on December 28, 2024 and sell it today you would earn a total of  26.00  from holding Barnwell Industries or generate 18.18% return on investment over 90 days.

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

Gran Tierra Energy  vs.  Barnwell Industries

Gran Tierra Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gran Tierra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Barnwell Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barnwell Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Barnwell Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gran Tierra and Barnwell Industries

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

The idea behind Gran Tierra Energy and Barnwell Industries 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.