Correlation Between SandRidge Energy and Empire Petroleum
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Empire Petroleum 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 Empire Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and Empire Petroleum Corp, you can compare the effects of market volatilities on SandRidge Energy and Empire Petroleum 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 Empire Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Empire Petroleum.
Diversification Opportunities for SandRidge Energy and Empire Petroleum
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SandRidge and Empire is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Empire Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Petroleum Corp 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 Empire Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Petroleum Corp has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Empire Petroleum go up and down completely randomly.
Pair Corralation between SandRidge Energy and Empire Petroleum
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 0.49 times more return on investment than Empire Petroleum. However, SandRidge Energy is 2.04 times less risky than Empire Petroleum. It trades about 0.46 of its potential returns per unit of risk. Empire Petroleum Corp is currently generating about 0.0 per unit of risk. If you would invest 1,053 in SandRidge Energy on October 21, 2024 and sell it today you would earn a total of 195.00 from holding SandRidge Energy or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Empire Petroleum Corp
Performance |
| Timeline |
| SandRidge Energy |
| Empire Petroleum Corp |
SandRidge Energy and Empire Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Empire Petroleum
The main advantage of trading using opposite SandRidge Energy and Empire Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Empire Petroleum 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 Empire Petroleum will offset losses from the drop in Empire Petroleum's long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Empire Petroleum vs. PHX Minerals | Empire Petroleum vs. Mexco Energy | Empire Petroleum vs. Granite Ridge Resources | Empire Petroleum vs. XXL Energy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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