Correlation Between Gran Tierra and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Gran Tierra and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Gran Tierra and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and SPDR Portfolio.
Diversification Opportunities for Gran Tierra and SPDR Portfolio
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gran and SPDR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Gran Tierra i.e., Gran Tierra and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Gran Tierra and SPDR Portfolio
Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 3.02 times more return on investment than SPDR Portfolio. However, Gran Tierra is 3.02 times more volatile than SPDR Portfolio SP. It trades about 0.36 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about -0.17 per unit of risk. If you would invest 653.00 in Gran Tierra Energy on January 19, 2024 and sell it today you would earn a total of 146.00 from holding Gran Tierra Energy or generate 22.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Gran Tierra Energy vs. SPDR Portfolio SP
Performance |
Timeline |
Gran Tierra Energy |
SPDR Portfolio SP |
Gran Tierra and SPDR Portfolio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gran Tierra and SPDR Portfolio
The main advantage of trading using opposite Gran Tierra and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Crescent Point Energy | Gran Tierra vs. Vermilion Energy |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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