Correlation Between SDX Energy and PrimeEnergy
Can any of the company-specific risk be diversified away by investing in both SDX Energy and PrimeEnergy 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 PrimeEnergy 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 PrimeEnergy, you can compare the effects of market volatilities on SDX Energy and PrimeEnergy 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 PrimeEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SDX Energy and PrimeEnergy.
Diversification Opportunities for SDX Energy and PrimeEnergy
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SDX and PrimeEnergy is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SDX Energy plc and PrimeEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrimeEnergy 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 PrimeEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrimeEnergy has no effect on the direction of SDX Energy i.e., SDX Energy and PrimeEnergy go up and down completely randomly.
Pair Corralation between SDX Energy and PrimeEnergy
Assuming the 90 days horizon SDX Energy is expected to generate 1.37 times less return on investment than PrimeEnergy. In addition to that, SDX Energy is 10.31 times more volatile than PrimeEnergy. It trades about 0.02 of its total potential returns per unit of risk. PrimeEnergy is currently generating about 0.29 per unit of volatility. If you would invest 16,495 in PrimeEnergy on September 1, 2024 and sell it today you would earn a total of 3,610 from holding PrimeEnergy or generate 21.89% 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. PrimeEnergy
Performance |
| Timeline |
| SDX Energy plc |
| PrimeEnergy |
SDX Energy and PrimeEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SDX Energy and PrimeEnergy
The main advantage of trading using opposite SDX Energy and PrimeEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SDX Energy position performs unexpectedly, PrimeEnergy 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 PrimeEnergy will offset losses from the drop in PrimeEnergy's long position.| SDX Energy vs. Permian Resources | SDX Energy vs. Devon Energy | SDX Energy vs. EOG Resources | SDX Energy vs. Coterra Energy |
| PrimeEnergy vs. Epsilon Energy | PrimeEnergy vs. Crescent Energy Co | PrimeEnergy vs. Evolution Petroleum | PrimeEnergy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |