Correlation Between Gulfport Energy and Berry Petroleum

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

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

Diversification Opportunities for Gulfport Energy and Berry Petroleum

0.92

Correlation Coefficient

Gulfport Energy  Berry Petroleum

Almost no diversification

The 3 months correlation between Gulfport and Berry is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gulfport Energy Operating and Berry Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berry Petroleum Corp and Gulfport 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 Gulfport Energy Operating are associated (or correlated) with Berry Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berry Petroleum Corp has no effect on the direction of Gulfport Energy i.e., Gulfport Energy and Berry Petroleum go up and down completely randomly.

Pair Corralation between Gulfport Energy and Berry Petroleum

Given the investment horizon of 90 days Gulfport Energy Operating is expected to under-perform the Berry Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Gulfport Energy Operating is 1.61 times less risky than Berry Petroleum. The stock trades about -0.08 of its potential returns per unit of risk. The Berry Petroleum Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  772.00  in Berry Petroleum Corp on January 19, 2024 and sell it today you would earn a total of  60.00  from holding Berry Petroleum Corp or generate 7.77% return on investment over 90 days.

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

Gulfport Energy Operating  vs.  Berry Petroleum Corp

Gulfport Energy Operating

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulfport Energy Operating are ranked lower than 15 (%) 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.

Berry Petroleum Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Berry Petroleum Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Berry Petroleum showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gulfport Energy and Berry Petroleum

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

The idea behind Gulfport Energy Operating and Berry Petroleum Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.