Correlation Between Gran Tierra and AMERICAN FUNDS

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Can any of the company-specific risk be diversified away by investing in both Gran Tierra and AMERICAN FUNDS 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 AMERICAN FUNDS 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 AMERICAN FUNDS 2010, you can compare the effects of market volatilities on Gran Tierra and AMERICAN FUNDS 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 AMERICAN FUNDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and AMERICAN FUNDS.

Diversification Opportunities for Gran Tierra and AMERICAN FUNDS

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Gran Tierra and AMERICAN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and AMERICAN FUNDS 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN FUNDS 2010 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 AMERICAN FUNDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN FUNDS 2010 has no effect on the direction of Gran Tierra i.e., Gran Tierra and AMERICAN FUNDS go up and down completely randomly.

Pair Corralation between Gran Tierra and AMERICAN FUNDS

Considering the 90-day investment horizon Gran Tierra Energy is expected to under-perform the AMERICAN FUNDS. In addition to that, Gran Tierra is 4.88 times more volatile than AMERICAN FUNDS 2010. It trades about -0.14 of its total potential returns per unit of risk. AMERICAN FUNDS 2010 is currently generating about 0.43 per unit of volatility. If you would invest  1,071  in AMERICAN FUNDS 2010 on September 4, 2022 and sell it today you would earn a total of  70.00  from holding AMERICAN FUNDS 2010 or generate 6.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Gran Tierra Energy  vs.  AMERICAN FUNDS 2010

 Performance (%) 
       Timeline  
Gran Tierra Energy 
Gran Tierra Performance
0 of 100
Over the last 90 days Gran Tierra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Gran Tierra Price Channel

AMERICAN FUNDS 2010 
AMERICAN Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AMERICAN FUNDS 2010 are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, AMERICAN FUNDS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AMERICAN Price Channel

Gran Tierra and AMERICAN FUNDS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gran Tierra and AMERICAN FUNDS

The main advantage of trading using opposite Gran Tierra and AMERICAN FUNDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, AMERICAN FUNDS 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 AMERICAN FUNDS will offset losses from the drop in AMERICAN FUNDS's long position.
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The idea behind Gran Tierra Energy and AMERICAN FUNDS 2010 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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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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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