Correlation Between SandRidge Energy and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Civitas 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 Civitas 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 Civitas Resources, you can compare the effects of market volatilities on SandRidge Energy and Civitas 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 Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Civitas Resources.
Diversification Opportunities for SandRidge Energy and Civitas Resources
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SandRidge and Civitas is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Civitas Resources go up and down completely randomly.
Pair Corralation between SandRidge Energy and Civitas Resources
Allowing for the 90-day total investment horizon SandRidge Energy is expected to under-perform the Civitas Resources. But the stock apears to be less risky and, when comparing its historical volatility, SandRidge Energy is 1.55 times less risky than Civitas Resources. The stock trades about -0.05 of its potential returns per unit of risk. The Civitas Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,770 in Civitas Resources on November 3, 2024 and sell it today you would earn a total of 306.00 from holding Civitas Resources or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Civitas Resources
Performance |
| Timeline |
| SandRidge Energy |
| Civitas Resources |
SandRidge Energy and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Civitas Resources
The main advantage of trading using opposite SandRidge Energy and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Civitas 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Civitas Resources vs. Magnolia Oil Gas | Civitas Resources vs. SM Energy Co | Civitas Resources vs. Range Resources Corp | Civitas Resources vs. Matador Resources |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |