Correlation Between Empire Petroleum and SDX Energy
Can any of the company-specific risk be diversified away by investing in both Empire Petroleum and SDX 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 Empire Petroleum and SDX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Petroleum Corp and SDX Energy plc, you can compare the effects of market volatilities on Empire Petroleum and SDX 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 Empire Petroleum with a short position of SDX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Petroleum and SDX Energy.
Diversification Opportunities for Empire Petroleum and SDX Energy
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and SDX is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and SDX Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SDX Energy plc and Empire 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 Empire Petroleum Corp are associated (or correlated) with SDX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SDX Energy plc has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and SDX Energy go up and down completely randomly.
Pair Corralation between Empire Petroleum and SDX Energy
Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to generate 0.13 times more return on investment than SDX Energy. However, Empire Petroleum Corp is 7.94 times less risky than SDX Energy. It trades about 0.24 of its potential returns per unit of risk. SDX Energy plc is currently generating about 0.02 per unit of risk. If you would invest 518.00 in Empire Petroleum Corp on September 1, 2024 and sell it today you would earn a total of 115.00 from holding Empire Petroleum Corp or generate 22.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Empire Petroleum Corp vs. SDX Energy plc
Performance |
| Timeline |
| Empire Petroleum Corp |
| SDX Energy plc |
Empire Petroleum and SDX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Petroleum and SDX Energy
The main advantage of trading using opposite Empire Petroleum and SDX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Petroleum position performs unexpectedly, SDX 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 SDX Energy will offset losses from the drop in SDX Energy's long position.| Empire Petroleum vs. PHX Minerals | Empire Petroleum vs. Mexco Energy | Empire Petroleum vs. Granite Ridge Resources | Empire Petroleum vs. XXL Energy Corp |
| SDX Energy vs. Permian Resources | SDX Energy vs. Devon Energy | SDX Energy vs. EOG Resources | SDX Energy vs. Coterra 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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