Correlation Between Callon Petroleum and SM Energy
Can any of the company-specific risk be diversified away by investing in both Callon 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 Callon 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 Callon Petroleum and SM Energy Co, you can compare the effects of market volatilities on Callon 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 Callon Petroleum with a short position of SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callon Petroleum and SM Energy.
Diversification Opportunities for Callon Petroleum and SM Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Callon and SM Energy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Callon Petroleum and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM 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 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 Callon Petroleum i.e., Callon Petroleum and SM Energy go up and down completely randomly.
Pair Corralation between Callon Petroleum and SM Energy
If you would invest 4,196 in SM Energy Co on August 28, 2024 and sell it today you would earn a total of 318.00 from holding SM Energy Co or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Callon Petroleum vs. SM Energy Co
Performance |
| Timeline |
| Callon Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SM Energy |
Callon Petroleum and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Callon Petroleum and SM Energy
The main advantage of trading using opposite Callon Petroleum and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callon 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.| Callon Petroleum vs. SandRidge Energy | Callon Petroleum vs. Permian Resources | Callon Petroleum vs. Matador Resources | Callon Petroleum vs. Antero Resources Corp |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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