Correlation Between Ring Energy and San Juan
Can any of the company-specific risk be diversified away by investing in both Ring Energy and San Juan 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 Ring Energy and San Juan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ring Energy and San Juan Basin, you can compare the effects of market volatilities on Ring Energy and San Juan 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 Ring Energy with a short position of San Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ring Energy and San Juan.
Diversification Opportunities for Ring Energy and San Juan
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ring and San is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy and San Juan Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Juan Basin and Ring Energy 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 Ring Energy are associated (or correlated) with San Juan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Juan Basin has no effect on the direction of Ring Energy i.e., Ring Energy and San Juan go up and down completely randomly.
Pair Corralation between Ring Energy and San Juan
Considering the 90-day investment horizon Ring Energy is expected to generate 2.82 times less return on investment than San Juan. In addition to that, Ring Energy is 1.17 times more volatile than San Juan Basin. It trades about 0.05 of its total potential returns per unit of risk. San Juan Basin is currently generating about 0.17 per unit of volatility. If you would invest 388.00 in San Juan Basin on September 5, 2024 and sell it today you would earn a total of 45.00 from holding San Juan Basin or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ring Energy vs. San Juan Basin
Performance |
| Timeline |
| Ring Energy |
| San Juan Basin |
Ring Energy and San Juan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ring Energy and San Juan
The main advantage of trading using opposite Ring Energy and San Juan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ring Energy position performs unexpectedly, San Juan 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 San Juan will offset losses from the drop in San Juan's long position.| Ring Energy vs. Vital Energy | Ring Energy vs. Permian Resources | Ring Energy vs. Magnolia Oil Gas | Ring Energy vs. SM Energy Co |
| San Juan vs. Evolution Petroleum | San Juan vs. Ring Energy | San Juan vs. Gran Tierra Energy | San Juan vs. PEDEVCO Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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