Correlation Between GeoPark and Vital Energy

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

By analyzing existing cross correlation between GeoPark and Vital Energy, you can compare the effects of market volatilities on GeoPark and Vital Energy 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 GeoPark with a short position of Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and Vital Energy.

Diversification Opportunities for GeoPark and Vital Energy

0.94

Correlation Coefficient

GeoPark  Vital Energy

Almost no diversification

The 3 months correlation between GeoPark and Vital is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Energy and GeoPark 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 GeoPark are associated (or correlated) with Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of GeoPark i.e., GeoPark and Vital Energy go up and down completely randomly.

Pair Corralation between GeoPark and Vital Energy

Given the investment horizon of 90 days GeoPark is expected to generate 0.8 times more return on investment than Vital Energy. However, GeoPark is 1.25 times less risky than Vital Energy. It trades about 0.0 of its potential returns per unit of risk. Vital Energy is currently generating about -0.03 per unit of risk. If you would invest  869.00  in GeoPark on March 21, 2025 and sell it today you would lose (123.00) from holding GeoPark or give up 14.15% of portfolio value over 90 days.

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

GeoPark  vs.  Vital Energy

GeoPark

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GeoPark are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, GeoPark is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Vital Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with GeoPark and Vital Energy

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

The idea behind GeoPark and Vital Energy 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.