Correlation Between Valeura Energy and Gulfport Energy

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

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

Diversification Opportunities for Valeura Energy and Gulfport Energy

0.83

Correlation Coefficient

Valeura Energy  Gulfport Energy

Very poor diversification

The 3 months correlation between Valeura and Gulfport is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Gulfport Energy Operating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulfport Energy Operating and Valeura 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 Valeura Energy are associated (or correlated) with Gulfport Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulfport Energy Operating has no effect on the direction of Valeura Energy i.e., Valeura Energy and Gulfport Energy go up and down completely randomly.

Pair Corralation between Valeura Energy and Gulfport Energy

Assuming the 90 days horizon Valeura Energy is expected to generate 2.03 times more return on investment than Gulfport Energy. However, Valeura Energy is 2.03 times more volatile than Gulfport Energy Operating. It trades about 0.07 of its potential returns per unit of risk. Gulfport Energy Operating is currently generating about 0.08 per unit of risk. If you would invest  175.00  in Valeura Energy on October 4, 2024 and sell it today you would earn a total of  328.00  from holding Valeura Energy or generate 187.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Valeura Energy  vs.  Gulfport Energy Operating

Valeura Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Valeura Energy and Gulfport Energy

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

The idea behind Valeura Energy and Gulfport Energy Operating 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.