Correlation Between Callon Petroleum and SandRidge Energy
Can any of the company-specific risk be diversified away by investing in both Callon Petroleum and SandRidge 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 Callon Petroleum and SandRidge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Callon Petroleum and SandRidge Energy, you can compare the effects of market volatilities on Callon Petroleum and SandRidge 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 Callon Petroleum with a short position of SandRidge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callon Petroleum and SandRidge Energy.
Diversification Opportunities for Callon Petroleum and SandRidge Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Callon and SandRidge is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Callon Petroleum and SandRidge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SandRidge Energy and Callon 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 Callon Petroleum are associated (or correlated) with SandRidge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SandRidge Energy has no effect on the direction of Callon Petroleum i.e., Callon Petroleum and SandRidge Energy go up and down completely randomly.
Pair Corralation between Callon Petroleum and SandRidge Energy
Considering the 90-day investment horizon Callon Petroleum is expected to under-perform the SandRidge Energy. In addition to that, Callon Petroleum is 1.56 times more volatile than SandRidge Energy. It trades about -0.02 of its total potential returns per unit of risk. SandRidge Energy is currently generating about 0.02 per unit of volatility. If you would invest 1,168 in SandRidge Energy on October 24, 2024 and sell it today you would earn a total of 65.00 from holding SandRidge Energy or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 24.09% |
| Values | Daily Returns |
Callon Petroleum vs. SandRidge Energy
Performance |
| Timeline |
| Callon Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SandRidge Energy |
Callon Petroleum and SandRidge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Callon Petroleum and SandRidge Energy
The main advantage of trading using opposite Callon Petroleum and SandRidge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callon Petroleum position performs unexpectedly, SandRidge 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 SandRidge Energy will offset losses from the drop in SandRidge Energy's long position.| Callon Petroleum vs. SandRidge Energy | Callon Petroleum vs. Permian Resources | Callon Petroleum vs. Matador Resources | Callon Petroleum vs. Antero Resources Corp |
| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
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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