Correlation Between Global Partners and Battalion Oil

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

By analyzing existing cross correlation between Global Partners LP and Battalion Oil Corp, you can compare the effects of market volatilities on Global Partners and Battalion Oil 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 Global Partners with a short position of Battalion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and Battalion Oil.

Diversification Opportunities for Global Partners and Battalion Oil

0.51

Correlation Coefficient

Global Partners  Battalion Oil

Very weak diversification

The 3 months correlation between Global and Battalion is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and Global Partners 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 Global Partners LP are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Global Partners i.e., Global Partners and Battalion Oil go up and down completely randomly.

Pair Corralation between Global Partners and Battalion Oil

Considering the 90-day investment horizon Global Partners is expected to generate 5.65 times less return on investment than Battalion Oil. But when comparing it to its historical volatility, Global Partners LP is 5.62 times less risky than Battalion Oil. It trades about 0.04 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Battalion Oil Corp on May 6, 2025 and sell it today you would earn a total of  2.00  from holding Battalion Oil Corp or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Global Partners LP  vs.  Battalion Oil Corp

Global Partners LP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Global Partners is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Battalion Oil Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Battalion Oil Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Battalion Oil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Partners and Battalion Oil

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

The idea behind Global Partners LP and Battalion Oil Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.