Correlation Between Gran Tierra and Dorchester Minerals
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Dorchester 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 Gran Tierra and Dorchester Minerals 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 Dorchester Minerals LP, you can compare the effects of market volatilities on Gran Tierra and Dorchester 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 Gran Tierra with a short position of Dorchester Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Dorchester Minerals.
Diversification Opportunities for Gran Tierra and Dorchester Minerals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gran and Dorchester is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Dorchester Minerals LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorchester Minerals 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 Dorchester Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorchester Minerals has no effect on the direction of Gran Tierra i.e., Gran Tierra and Dorchester Minerals go up and down completely randomly.
Pair Corralation between Gran Tierra and Dorchester Minerals
Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 2.09 times more return on investment than Dorchester Minerals. However, Gran Tierra is 2.09 times more volatile than Dorchester Minerals LP. It trades about 0.02 of its potential returns per unit of risk. Dorchester Minerals LP is currently generating about 0.04 per unit of risk. If you would invest 633.00 in Gran Tierra Energy on September 12, 2024 and sell it today you would earn a total of 57.00 from holding Gran Tierra Energy or generate 9.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Gran Tierra Energy vs. Dorchester Minerals LP
Performance |
Timeline |
Gran Tierra Energy |
Dorchester Minerals |
Gran Tierra and Dorchester Minerals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gran Tierra and Dorchester Minerals
The main advantage of trading using opposite Gran Tierra and Dorchester Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, Dorchester 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 Dorchester Minerals will offset losses from the drop in Dorchester Minerals' long position.Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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