Correlation Between Stepan and Southwestern
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By analyzing existing cross correlation between Stepan Company and Southwestern Energy 495, you can compare the effects of market volatilities on Stepan and Southwestern 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 Stepan with a short position of Southwestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Southwestern.
Diversification Opportunities for Stepan and Southwestern
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and Southwestern is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Southwestern Energy 495 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern Energy 495 and Stepan 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 Stepan Company are associated (or correlated) with Southwestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy 495 has no effect on the direction of Stepan i.e., Stepan and Southwestern go up and down completely randomly.
Pair Corralation between Stepan and Southwestern
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Southwestern. In addition to that, Stepan is 4.06 times more volatile than Southwestern Energy 495. It trades about -0.03 of its total potential returns per unit of risk. Southwestern Energy 495 is currently generating about 0.0 per unit of volatility. If you would invest 9,950 in Southwestern Energy 495 on September 12, 2024 and sell it today you would lose (85.00) from holding Southwestern Energy 495 or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.96% |
| Values | Daily Returns |
Stepan Company vs. Southwestern Energy 495
Performance |
| Timeline |
| Stepan Company |
| Southwestern Energy 495 |
Stepan and Southwestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Southwestern
The main advantage of trading using opposite Stepan and Southwestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Southwestern 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 Southwestern will offset losses from the drop in Southwestern's long position.The idea behind Stepan Company and Southwestern Energy 495 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Southwestern vs. Mesa Air Group | Southwestern vs. Stepan Company | Southwestern vs. Lindblad Expeditions Holdings | Southwestern vs. Delek Logistics Partners |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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