Correlation Between SM Energy and Vietnam Enterprise
Can any of the company-specific risk be diversified away by investing in both SM Energy and Vietnam Enterprise 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 Vietnam Enterprise 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 Vietnam Enterprise Investments, you can compare the effects of market volatilities on SM Energy and Vietnam Enterprise 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 Vietnam Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Vietnam Enterprise.
Diversification Opportunities for SM Energy and Vietnam Enterprise
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0KZA and Vietnam is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Vietnam Enterprise Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Enterprise 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 Vietnam Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Enterprise has no effect on the direction of SM Energy i.e., SM Energy and Vietnam Enterprise go up and down completely randomly.
Pair Corralation between SM Energy and Vietnam Enterprise
Assuming the 90 days trading horizon SM Energy Co is expected to under-perform the Vietnam Enterprise. In addition to that, SM Energy is 3.02 times more volatile than Vietnam Enterprise Investments. It trades about -0.01 of its total potential returns per unit of risk. Vietnam Enterprise Investments is currently generating about 0.04 per unit of volatility. If you would invest 56,900 in Vietnam Enterprise Investments on October 25, 2024 and sell it today you would earn a total of 2,500 from holding Vietnam Enterprise Investments or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
SM Energy Co vs. Vietnam Enterprise Investments
Performance |
| Timeline |
| SM Energy |
| Vietnam Enterprise |
SM Energy and Vietnam Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and Vietnam Enterprise
The main advantage of trading using opposite SM Energy and Vietnam Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, Vietnam Enterprise 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 Vietnam Enterprise will offset losses from the drop in Vietnam Enterprise'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 |
| Vietnam Enterprise vs. Games Workshop Group | Vietnam Enterprise vs. Auto Trader Group | Vietnam Enterprise vs. Coor Service Management | Vietnam Enterprise vs. iShares Dow Jones |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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