Correlation Between SandRidge Energy and Adams Resources
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Adams Resources 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 SandRidge Energy and Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and Adams Resources Energy, you can compare the effects of market volatilities on SandRidge Energy and Adams Resources 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 SandRidge Energy with a short position of Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Adams Resources.
Diversification Opportunities for SandRidge Energy and Adams Resources
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SandRidge and Adams is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy and SandRidge 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 SandRidge Energy are associated (or correlated) with Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Adams Resources go up and down completely randomly.
Pair Corralation between SandRidge Energy and Adams Resources
Allowing for the 90-day total investment horizon SandRidge Energy is expected to under-perform the Adams Resources. But the stock apears to be less risky and, when comparing its historical volatility, SandRidge Energy is 1.4 times less risky than Adams Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Adams Resources Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,602 in Adams Resources Energy on August 24, 2024 and sell it today you would earn a total of 122.00 from holding Adams Resources Energy or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Adams Resources Energy
Performance |
| Timeline |
| SandRidge Energy |
| Adams Resources Energy |
SandRidge Energy and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Adams Resources
The main advantage of trading using opposite SandRidge Energy and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Adams Resources 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 Adams Resources will offset losses from the drop in Adams Resources' long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Adams Resources vs. PrimeEnergy | Adams Resources vs. Barnwell Industries | Adams Resources vs. Acme United | Adams Resources vs. CKX Lands |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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