Correlation Between Calumet Specialty and Gulfport Energy

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

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

Diversification Opportunities for Calumet Specialty and Gulfport Energy

0.5

Correlation Coefficient

Calumet Specialty  Gulfport Energy

Very weak diversification

The 3 months correlation between Calumet and Gulfport is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products 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 Calumet Specialty 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 Calumet Specialty Products 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 Calumet Specialty i.e., Calumet Specialty and Gulfport Energy go up and down completely randomly.

Pair Corralation between Calumet Specialty and Gulfport Energy

Given the investment horizon of 90 days Calumet Specialty is expected to generate 1.47 times less return on investment than Gulfport Energy. In addition to that, Calumet Specialty is 1.56 times more volatile than Gulfport Energy Operating. It trades about 0.06 of its total potential returns per unit of risk. Gulfport Energy Operating is currently generating about 0.14 per unit of volatility. If you would invest  14,700  in Gulfport Energy Operating on September 17, 2024 and sell it today you would earn a total of  2,909  from holding Gulfport Energy Operating or generate 19.79% return on investment over 90 days.

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

Calumet Specialty Products  vs.  Gulfport Energy Operating

Calumet Specialty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calumet Specialty Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, Calumet Specialty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gulfport Energy Operating

Risk-Adjusted Performance

11 of 100

OK

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 unsteady basic indicators, Gulfport Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calumet Specialty and Gulfport Energy

The main advantage of trading using opposite Calumet Specialty and Gulfport Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calumet Specialty 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 Calumet Specialty Products 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.