Correlation Between SDX Energy and Empire Petroleum
Can any of the company-specific risk be diversified away by investing in both SDX Energy and Empire Petroleum 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 SDX Energy and Empire Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SDX Energy plc and Empire Petroleum Corp, you can compare the effects of market volatilities on SDX Energy and Empire Petroleum 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 SDX Energy with a short position of Empire Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SDX Energy and Empire Petroleum.
Diversification Opportunities for SDX Energy and Empire Petroleum
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SDX and Empire is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SDX Energy plc and Empire Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Petroleum Corp and SDX 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 SDX Energy plc are associated (or correlated) with Empire Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Petroleum Corp has no effect on the direction of SDX Energy i.e., SDX Energy and Empire Petroleum go up and down completely randomly.
Pair Corralation between SDX Energy and Empire Petroleum
Assuming the 90 days horizon SDX Energy is expected to generate 1.44 times less return on investment than Empire Petroleum. In addition to that, SDX Energy is 7.94 times more volatile than Empire Petroleum Corp. It trades about 0.02 of its total potential returns per unit of risk. Empire Petroleum Corp is currently generating about 0.24 per unit of volatility. If you would invest 518.00 in Empire Petroleum Corp on September 1, 2024 and sell it today you would earn a total of 115.00 from holding Empire Petroleum Corp or generate 22.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
SDX Energy plc vs. Empire Petroleum Corp
Performance |
| Timeline |
| SDX Energy plc |
| Empire Petroleum Corp |
SDX Energy and Empire Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SDX Energy and Empire Petroleum
The main advantage of trading using opposite SDX Energy and Empire Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SDX Energy position performs unexpectedly, Empire Petroleum 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 Empire Petroleum will offset losses from the drop in Empire Petroleum's long position.| SDX Energy vs. Permian Resources | SDX Energy vs. Devon Energy | SDX Energy vs. EOG Resources | SDX Energy vs. Coterra Energy |
| Empire Petroleum vs. PHX Minerals | Empire Petroleum vs. Mexco Energy | Empire Petroleum vs. Granite Ridge Resources | Empire Petroleum vs. XXL Energy 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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