Correlation Between Berry Petroleum and Gran Tierra

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

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

Diversification Opportunities for Berry Petroleum and Gran Tierra

-0.23

Correlation Coefficient

Berry Petroleum  Gran Tierra

Very good diversification

The 3 months correlation between Berry and Gran is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Berry Petroleum Corp and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra Energy and Berry Petroleum 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 Berry Petroleum Corp are associated (or correlated) with Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Berry Petroleum i.e., Berry Petroleum and Gran Tierra go up and down completely randomly.

Pair Corralation between Berry Petroleum and Gran Tierra

Considering the 90-day investment horizon Berry Petroleum Corp is expected to under-perform the Gran Tierra. In addition to that, Berry Petroleum is 1.01 times more volatile than Gran Tierra Energy. It trades about -0.14 of its total potential returns per unit of risk. Gran Tierra Energy is currently generating about 0.05 per unit of volatility. If you would invest  630.00  in Gran Tierra Energy on September 17, 2024 and sell it today you would earn a total of  47.00  from holding Gran Tierra Energy or generate 7.46% return on investment over 90 days.

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

Berry Petroleum Corp  vs.  Gran Tierra Energy

Berry Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berry Petroleum Corp 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 fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gran Tierra Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gran Tierra Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Gran Tierra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Berry Petroleum and Gran Tierra

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

The idea behind Berry Petroleum Corp and Gran Tierra Energy 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.