Correlation Between SandRidge Energy and NACCO Industries
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and NACCO Industries 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 NACCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and NACCO Industries, you can compare the effects of market volatilities on SandRidge Energy and NACCO Industries 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 NACCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and NACCO Industries.
Diversification Opportunities for SandRidge Energy and NACCO Industries
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SandRidge and NACCO is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and NACCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NACCO Industries 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 NACCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NACCO Industries has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and NACCO Industries go up and down completely randomly.
Pair Corralation between SandRidge Energy and NACCO Industries
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 0.85 times more return on investment than NACCO Industries. However, SandRidge Energy is 1.18 times less risky than NACCO Industries. It trades about 0.0 of its potential returns per unit of risk. NACCO Industries is currently generating about -0.01 per unit of risk. If you would invest 1,344 in SandRidge Energy on August 28, 2024 and sell it today you would lose (157.00) from holding SandRidge Energy or give up 11.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. NACCO Industries
Performance |
| Timeline |
| SandRidge Energy |
| NACCO Industries |
SandRidge Energy and NACCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and NACCO Industries
The main advantage of trading using opposite SandRidge Energy and NACCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, NACCO Industries 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 NACCO Industries will offset losses from the drop in NACCO Industries' long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Consol Energy | NACCO Industries vs. Indo Tambangraya Megah |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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