Correlation Between SandRidge Energy and Sound Energy
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Sound 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 Sound 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 Sound Energy plc, you can compare the effects of market volatilities on SandRidge Energy and Sound 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 Sound Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Sound Energy.
Diversification Opportunities for SandRidge Energy and Sound Energy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SandRidge and Sound is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Sound Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Energy plc 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 Sound Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Energy plc has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Sound Energy go up and down completely randomly.
Pair Corralation between SandRidge Energy and Sound Energy
Allowing for the 90-day total investment horizon SandRidge Energy is expected to under-perform the Sound Energy. In addition to that, SandRidge Energy is 14.94 times more volatile than Sound Energy plc. It trades about -0.05 of its total potential returns per unit of risk. Sound Energy plc is currently generating about 0.21 per unit of volatility. If you would invest 2.64 in Sound Energy plc on November 3, 2024 and sell it today you would earn a total of 0.01 from holding Sound Energy plc or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
SandRidge Energy vs. Sound Energy plc
Performance |
| Timeline |
| SandRidge Energy |
| Sound Energy plc |
SandRidge Energy and Sound Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Sound Energy
The main advantage of trading using opposite SandRidge Energy and Sound Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Sound 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 Sound Energy will offset losses from the drop in Sound Energy's long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Sound Energy vs. Cgrowth Capital | Sound Energy vs. Energy Revenue Amer | Sound Energy vs. Prairie Provident Resources | Sound Energy vs. MMEX Resources Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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