Correlation Between SM Energy and JZ Capital
Can any of the company-specific risk be diversified away by investing in both SM Energy and JZ Capital 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 SM Energy and JZ Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Energy Co and JZ Capital Partners, you can compare the effects of market volatilities on SM Energy and JZ Capital 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 SM Energy with a short position of JZ Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and JZ Capital.
Diversification Opportunities for SM Energy and JZ Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0KZA and JZCP is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and JZ Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JZ Capital Partners and SM Energy 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 SM Energy Co are associated (or correlated) with JZ Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JZ Capital Partners has no effect on the direction of SM Energy i.e., SM Energy and JZ Capital go up and down completely randomly.
Pair Corralation between SM Energy and JZ Capital
Assuming the 90 days trading horizon SM Energy Co is expected to generate 1.13 times more return on investment than JZ Capital. However, SM Energy is 1.13 times more volatile than JZ Capital Partners. It trades about 0.3 of its potential returns per unit of risk. JZ Capital Partners is currently generating about 0.1 per unit of risk. If you would invest 4,034 in SM Energy Co on September 2, 2024 and sell it today you would earn a total of 475.00 from holding SM Energy Co or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Energy Co vs. JZ Capital Partners
Performance |
| Timeline |
| SM Energy |
| JZ Capital Partners |
SM Energy and JZ Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and JZ Capital
The main advantage of trading using opposite SM Energy and JZ Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, JZ Capital 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 JZ Capital will offset losses from the drop in JZ Capital's long position.| SM Energy vs. Catalyst Media Group | SM Energy vs. XLMedia PLC | SM Energy vs. Hollywood Bowl Group | SM Energy vs. Jupiter Fund Management |
| JZ Capital vs. AcadeMedia AB | JZ Capital vs. Bytes Technology | JZ Capital vs. XLMedia PLC | JZ Capital vs. Sunny Optical Technology |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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