Correlation Between Dorchester Minerals and SandRidge Energy
Can any of the company-specific risk be diversified away by investing in both Dorchester Minerals 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 Dorchester Minerals and SandRidge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorchester Minerals LP and SandRidge Energy, you can compare the effects of market volatilities on Dorchester Minerals 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 Dorchester Minerals with a short position of SandRidge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorchester Minerals and SandRidge Energy.
Diversification Opportunities for Dorchester Minerals and SandRidge Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dorchester and SandRidge is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dorchester Minerals LP and SandRidge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SandRidge Energy and Dorchester Minerals 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 Dorchester Minerals LP 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 Dorchester Minerals i.e., Dorchester Minerals and SandRidge Energy go up and down completely randomly.
Pair Corralation between Dorchester Minerals and SandRidge Energy
Given the investment horizon of 90 days Dorchester Minerals is expected to generate 4.99 times less return on investment than SandRidge Energy. But when comparing it to its historical volatility, Dorchester Minerals LP is 1.61 times less risky than SandRidge Energy. It trades about 0.15 of its potential returns per unit of risk. SandRidge Energy is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 1,053 in SandRidge Energy on October 21, 2024 and sell it today you would earn a total of 195.00 from holding SandRidge Energy or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorchester Minerals LP vs. SandRidge Energy
Performance |
| Timeline |
| Dorchester Minerals |
| SandRidge Energy |
Dorchester Minerals and SandRidge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorchester Minerals and SandRidge Energy
The main advantage of trading using opposite Dorchester Minerals and SandRidge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorchester Minerals 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.| Dorchester Minerals vs. Black Stone Minerals | Dorchester Minerals vs. Sitio Royalties Corp | Dorchester Minerals vs. MV Oil Trust | Dorchester Minerals vs. VOC Energy Trust |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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