Correlation Between SandRidge Energy and Small Cap
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and Small Cap Premium, you can compare the effects of market volatilities on SandRidge Energy and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Small Cap.
Diversification Opportunities for SandRidge Energy and Small Cap
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SandRidge and Small is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Small Cap Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Premium 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Premium has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Small Cap go up and down completely randomly.
Pair Corralation between SandRidge Energy and Small Cap
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 2.99 times more return on investment than Small Cap. However, SandRidge Energy is 2.99 times more volatile than Small Cap Premium. It trades about 0.21 of its potential returns per unit of risk. Small Cap Premium is currently generating about 0.01 per unit of risk. If you would invest 1,117 in SandRidge Energy on August 25, 2024 and sell it today you would earn a total of 94.00 from holding SandRidge Energy or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Small Cap Premium
Performance |
| Timeline |
| SandRidge Energy |
| Small Cap Premium |
SandRidge Energy and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Small Cap
The main advantage of trading using opposite SandRidge Energy and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. Voya Global Advantage | Small Cap vs. Ready Capital |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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