Correlation Between SandRidge Energy and Veren
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy and Veren 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 Veren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and Veren Inc, you can compare the effects of market volatilities on SandRidge Energy and Veren 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 Veren. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Veren.
Diversification Opportunities for SandRidge Energy and Veren
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SandRidge and Veren is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Veren Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veren Inc 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 Veren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veren Inc has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and Veren go up and down completely randomly.
Pair Corralation between SandRidge Energy and Veren
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 0.53 times more return on investment than Veren. However, SandRidge Energy is 1.89 times less risky than Veren. It trades about 0.15 of its potential returns per unit of risk. Veren Inc is currently generating about -0.13 per unit of risk. If you would invest 1,094 in SandRidge Energy on August 30, 2024 and sell it today you would earn a total of 68.00 from holding SandRidge Energy or generate 6.22% 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. Veren Inc
Performance |
| Timeline |
| SandRidge Energy |
| Veren Inc |
SandRidge Energy and Veren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Veren
The main advantage of trading using opposite SandRidge Energy and Veren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy position performs unexpectedly, Veren 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 Veren will offset losses from the drop in Veren's long position.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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