Correlation Between SandRidge Energy and Highpeak Energy
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Highpeak Energy 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 Highpeak Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and Highpeak Energy Acquisition, you can compare the effects of market volatilities on SandRidge Energy and Highpeak Energy 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 Highpeak Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Highpeak Energy.
Diversification Opportunities for SandRidge Energy and Highpeak Energy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SandRidge and Highpeak is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Highpeak Energy Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highpeak Energy Acqu 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 Highpeak Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highpeak Energy Acqu has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Highpeak Energy go up and down completely randomly.
Pair Corralation between SandRidge Energy and Highpeak Energy
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 2.62 times less return on investment than Highpeak Energy. But when comparing it to its historical volatility, SandRidge Energy is 1.64 times less risky than Highpeak Energy. It trades about 0.12 of its potential returns per unit of risk. Highpeak Energy Acquisition is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,312 in Highpeak Energy Acquisition on August 31, 2024 and sell it today you would earn a total of 174.00 from holding Highpeak Energy Acquisition or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Highpeak Energy Acquisition
Performance |
| Timeline |
| SandRidge Energy |
| Highpeak Energy Acqu |
SandRidge Energy and Highpeak Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Highpeak Energy
The main advantage of trading using opposite SandRidge Energy and Highpeak Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Highpeak Energy 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 Highpeak Energy will offset losses from the drop in Highpeak Energy's long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Highpeak Energy vs. Vital Energy | Highpeak Energy vs. Permian Resources | Highpeak Energy vs. Magnolia Oil Gas | Highpeak Energy vs. Ring Energy |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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