Correlation Between SM Energy and Seraphim Space
Can any of the company-specific risk be diversified away by investing in both SM Energy and Seraphim Space 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 Seraphim Space 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 Seraphim Space Investment, you can compare the effects of market volatilities on SM Energy and Seraphim Space 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 Seraphim Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Seraphim Space.
Diversification Opportunities for SM Energy and Seraphim Space
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0KZA and Seraphim is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Seraphim Space Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seraphim Space Investment 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 Seraphim Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seraphim Space Investment has no effect on the direction of SM Energy i.e., SM Energy and Seraphim Space go up and down completely randomly.
Pair Corralation between SM Energy and Seraphim Space
Assuming the 90 days trading horizon SM Energy Co is expected to generate 0.85 times more return on investment than Seraphim Space. However, SM Energy Co is 1.17 times less risky than Seraphim Space. It trades about 0.35 of its potential returns per unit of risk. Seraphim Space Investment is currently generating about -0.14 per unit of risk. If you would invest 3,764 in SM Energy Co on October 25, 2024 and sell it today you would earn a total of 431.00 from holding SM Energy Co or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
SM Energy Co vs. Seraphim Space Investment
Performance |
| Timeline |
| SM Energy |
| Seraphim Space Investment |
SM Energy and Seraphim Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and Seraphim Space
The main advantage of trading using opposite SM Energy and Seraphim Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, Seraphim Space 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 Seraphim Space will offset losses from the drop in Seraphim Space's long position.| SM Energy vs. Alien Metals | SM Energy vs. Bankers Investment Trust | SM Energy vs. New Residential Investment | SM Energy vs. Europa Metals |
| Seraphim Space vs. Accesso Technology Group | Seraphim Space vs. Take Two Interactive Software | Seraphim Space vs. Creo Medical Group | Seraphim Space vs. International Biotechnology Trust |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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