Correlation Between Gran Tierra and Fidelity National

Can any of the company-specific risk be diversified away by investing in both Gran Tierra and Fidelity National 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 Fidelity National 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 Fidelity National Financial, you can compare the effects of market volatilities on Gran Tierra and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and Fidelity National.

Diversification Opportunities for Gran Tierra and Fidelity National

0.05

Correlation Coefficient

Gran Tierra  Fidelity National

Significant diversification

The 3 months correlation between Gran and Fidelity is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and Fidelity National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Gran Tierra i.e., Gran Tierra and Fidelity National go up and down completely randomly.

Pair Corralation between Gran Tierra and Fidelity National

Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 1.15 times more return on investment than Fidelity National. However, Gran Tierra is 1.15 times more volatile than Fidelity National Financial. It trades about 0.32 of its potential returns per unit of risk. Fidelity National Financial is currently generating about 0.0 per unit of risk. If you would invest  694.00  in Gran Tierra Energy on January 26, 2024 and sell it today you would earn a total of  132.00  from holding Gran Tierra Energy or generate 19.02% return on investment over 90 days.

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

Gran Tierra Energy  vs.  Fidelity National Financial

Gran Tierra Energy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gran Tierra Energy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Gran Tierra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fidelity National

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity National Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fidelity National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gran Tierra and Fidelity National

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

The idea behind Gran Tierra Energy and Fidelity National Financial 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.