Correlation Between Granite Ridge and Battalion Oil

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

By analyzing existing cross correlation between Granite Ridge Resources and Battalion Oil Corp, you can compare the effects of market volatilities on Granite Ridge and Battalion Oil 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 Granite Ridge with a short position of Battalion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Battalion Oil.

Diversification Opportunities for Granite Ridge and Battalion Oil

-0.18

Correlation Coefficient

Granite Ridge  Battalion Oil

Good diversification

The 3 months correlation between Granite and Battalion is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and Granite Ridge 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 Granite Ridge Resources are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Granite Ridge i.e., Granite Ridge and Battalion Oil go up and down completely randomly.

Pair Corralation between Granite Ridge and Battalion Oil

Given the investment horizon of 90 days Granite Ridge Resources is expected to generate 0.51 times more return on investment than Battalion Oil. However, Granite Ridge Resources is 1.98 times less risky than Battalion Oil. It trades about 0.07 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about 0.01 per unit of risk. If you would invest  607.00  in Granite Ridge Resources on February 25, 2024 and sell it today you would earn a total of  50.00  from holding Granite Ridge Resources or generate 8.24% return on investment over 90 days.

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

Granite Ridge Resources  vs.  Battalion Oil Corp

Granite Ridge Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Ridge Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Granite Ridge may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Battalion Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Battalion Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Battalion Oil is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Granite Ridge and Battalion Oil

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

The idea behind Granite Ridge Resources and Battalion Oil 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.