Correlation Between SandRidge Energy and Greenfire Resources
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Greenfire 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 Greenfire 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 Greenfire Resources, you can compare the effects of market volatilities on SandRidge Energy and Greenfire 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 Greenfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Greenfire Resources.
Diversification Opportunities for SandRidge Energy and Greenfire Resources
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SandRidge and Greenfire is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Greenfire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenfire 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 Greenfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenfire Resources has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Greenfire Resources go up and down completely randomly.
Pair Corralation between SandRidge Energy and Greenfire Resources
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 0.64 times more return on investment than Greenfire Resources. However, SandRidge Energy is 1.55 times less risky than Greenfire Resources. It trades about -0.02 of its potential returns per unit of risk. Greenfire Resources is currently generating about -0.1 per unit of risk. If you would invest 1,148 in SandRidge Energy on September 14, 2024 and sell it today you would lose (9.00) from holding SandRidge Energy or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Greenfire Resources
Performance |
| Timeline |
| SandRidge Energy |
| Greenfire Resources |
SandRidge Energy and Greenfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Greenfire Resources
The main advantage of trading using opposite SandRidge Energy and Greenfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Greenfire 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 Greenfire Resources will offset losses from the drop in Greenfire Resources' long position.| SandRidge Energy vs. Evolution Petroleum | SandRidge Energy vs. Ring Energy | SandRidge Energy vs. Gran Tierra Energy | SandRidge Energy vs. Permian Resources |
| Greenfire Resources vs. Evolution Petroleum | Greenfire Resources vs. Ring Energy | Greenfire Resources vs. Gran Tierra Energy | Greenfire Resources vs. Permian 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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