Correlation Between Berry Petroleum and SM Energy
Can any of the company-specific risk be diversified away by investing in both Berry Petroleum and SM 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 Berry Petroleum and SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berry Petroleum Corp and SM Energy Co, you can compare the effects of market volatilities on Berry Petroleum and SM 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 Berry Petroleum with a short position of SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berry Petroleum and SM Energy.
Diversification Opportunities for Berry Petroleum and SM Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Berry and SM Energy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Berry Petroleum Corp and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and Berry Petroleum 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 Berry Petroleum Corp are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of Berry Petroleum i.e., Berry Petroleum and SM Energy go up and down completely randomly.
Pair Corralation between Berry Petroleum and SM Energy
Considering the 90-day investment horizon Berry Petroleum Corp is expected to generate 1.12 times more return on investment than SM Energy. However, Berry Petroleum is 1.12 times more volatile than SM Energy Co. It trades about 0.71 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.38 per unit of risk. If you would invest 380.00 in Berry Petroleum Corp on October 23, 2024 and sell it today you would earn a total of 111.00 from holding Berry Petroleum Corp or generate 29.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berry Petroleum Corp vs. SM Energy Co
Performance |
| Timeline |
| Berry Petroleum Corp |
| SM Energy |
Berry Petroleum and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berry Petroleum and SM Energy
The main advantage of trading using opposite Berry Petroleum and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berry Petroleum position performs unexpectedly, SM 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 SM Energy will offset losses from the drop in SM Energy's long position.| Berry Petroleum vs. California Resources Corp | Berry Petroleum vs. Magnolia Oil Gas | Berry Petroleum vs. Comstock Resources | Berry Petroleum vs. Gulfport Energy Operating |
| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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