Correlation Between Gran Tierra and American Fds

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Can any of the company-specific risk be diversified away by investing in both Gran Tierra and American Fds 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 Fds 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 Fds 2015, you can compare the effects of market volatilities on Gran Tierra and American Fds 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 Fds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gran Tierra and American Fds.

Diversification Opportunities for Gran Tierra and American Fds

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Gran Tierra and American is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gran Tierra Energy and American Fds 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Fds 2015 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 Fds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Fds 2015 has no effect on the direction of Gran Tierra i.e., Gran Tierra and American Fds go up and down completely randomly.

Pair Corralation between Gran Tierra and American Fds

Considering the 90-day investment horizon Gran Tierra Energy is expected to generate 10.32 times more return on investment than American Fds. However, Gran Tierra is 10.32 times more volatile than American Fds 2015. It trades about 0.07 of its potential returns per unit of risk. American Fds 2015 is currently generating about 0.48 per unit of risk. If you would invest  115.00  in Gran Tierra Energy on May 19, 2022 and sell it today you would earn a total of  6.00  from holding Gran Tierra Energy or generate 5.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Gran Tierra Energy  vs.  American Fds 2015

 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 sluggish performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gran Tierra Price Channel

American Fds 2015 
American Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Fds 2015 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 Fds is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

American Price Channel

Gran Tierra and American Fds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gran Tierra and American Fds

The main advantage of trading using opposite Gran Tierra and American Fds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gran Tierra position performs unexpectedly, American Fds 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 Fds will offset losses from the drop in American Fds' long position.
The idea behind Gran Tierra Energy and American Fds 2015 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.

American Fds 2015

Pair trading matchups for American Fds

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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