Correlation Between SandRidge Mississippian and Tullow Oil
Can any of the company-specific risk be diversified away by investing in both SandRidge Mississippian and Tullow Oil 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 Mississippian and Tullow Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Mississippian Trust and Tullow Oil PLC, you can compare the effects of market volatilities on SandRidge Mississippian and Tullow Oil 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 Mississippian with a short position of Tullow Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Mississippian and Tullow Oil.
Diversification Opportunities for SandRidge Mississippian and Tullow Oil
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SandRidge and Tullow is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Mississippian Trust and Tullow Oil PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil PLC and SandRidge Mississippian 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 Mississippian Trust are associated (or correlated) with Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil PLC has no effect on the direction of SandRidge Mississippian i.e., SandRidge Mississippian and Tullow Oil go up and down completely randomly.
Pair Corralation between SandRidge Mississippian and Tullow Oil
If you would invest 6.50 in SandRidge Mississippian Trust on September 1, 2024 and sell it today you would earn a total of 0.00 from holding SandRidge Mississippian Trust or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
SandRidge Mississippian Trust vs. Tullow Oil PLC
Performance |
| Timeline |
| SandRidge Mississippian |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tullow Oil PLC |
SandRidge Mississippian and Tullow Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Mississippian and Tullow Oil
The main advantage of trading using opposite SandRidge Mississippian and Tullow Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Mississippian position performs unexpectedly, Tullow Oil 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 Tullow Oil will offset losses from the drop in Tullow Oil's long position.| SandRidge Mississippian vs. PetroShale | SandRidge Mississippian vs. Inpex Corp ADR | SandRidge Mississippian vs. Canacol Energy | SandRidge Mississippian vs. Battalion Oil Corp |
| Tullow Oil vs. Permian Resources | Tullow Oil vs. Devon Energy | Tullow Oil vs. EOG Resources | Tullow Oil vs. Coterra Energy |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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