Correlation Between SM Energy and Ovintiv
Can any of the company-specific risk be diversified away by investing in both SM Energy and Ovintiv 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 SM Energy and Ovintiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Energy Co and Ovintiv, you can compare the effects of market volatilities on SM Energy and Ovintiv 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 SM Energy with a short position of Ovintiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Ovintiv.
Diversification Opportunities for SM Energy and Ovintiv
Very poor diversification
The 3 months correlation between SM Energy and Ovintiv is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv and SM 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 SM Energy Co are associated (or correlated) with Ovintiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovintiv has no effect on the direction of SM Energy i.e., SM Energy and Ovintiv go up and down completely randomly.
Pair Corralation between SM Energy and Ovintiv
Allowing for the 90-day total investment horizon SM Energy Co is expected to generate 1.11 times more return on investment than Ovintiv. However, SM Energy is 1.11 times more volatile than Ovintiv. It trades about 0.04 of its potential returns per unit of risk. Ovintiv is currently generating about 0.01 per unit of risk. If you would invest 3,349 in SM Energy Co on August 30, 2024 and sell it today you would earn a total of 1,134 from holding SM Energy Co or generate 33.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Energy Co vs. Ovintiv
Performance |
| Timeline |
| SM Energy |
| Ovintiv |
SM Energy and Ovintiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and Ovintiv
The main advantage of trading using opposite SM Energy and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, Ovintiv 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 Ovintiv will offset losses from the drop in Ovintiv's long position.| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
| Ovintiv vs. Baytex Energy Corp | Ovintiv vs. Obsidian Energy | Ovintiv vs. Canadian Natural Resources | Ovintiv vs. Vermilion 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world |