Correlation Between SandRidge Energy and LandBridge Company
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and LandBridge Company 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 LandBridge Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and LandBridge Company LLC, you can compare the effects of market volatilities on SandRidge Energy and LandBridge Company 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 LandBridge Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and LandBridge Company.
Diversification Opportunities for SandRidge Energy and LandBridge Company
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SandRidge and LandBridge is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and LandBridge Company LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandBridge Company 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 LandBridge Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandBridge Company has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and LandBridge Company go up and down completely randomly.
Pair Corralation between SandRidge Energy and LandBridge Company
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 0.26 times more return on investment than LandBridge Company. However, SandRidge Energy is 3.85 times less risky than LandBridge Company. It trades about -0.07 of its potential returns per unit of risk. LandBridge Company LLC is currently generating about -0.02 per unit of risk. If you would invest 1,248 in SandRidge Energy on November 18, 2024 and sell it today you would lose (33.00) from holding SandRidge Energy or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. LandBridge Company LLC
Performance |
| Timeline |
| SandRidge Energy |
| LandBridge Company |
SandRidge Energy and LandBridge Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and LandBridge Company
The main advantage of trading using opposite SandRidge Energy and LandBridge Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, LandBridge Company 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 LandBridge Company will offset losses from the drop in LandBridge Company's long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| LandBridge Company vs. Xtant Medical Holdings | LandBridge Company vs. Integrated Media Technology | LandBridge Company vs. Alvotech | LandBridge Company vs. Playstudios |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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