Correlation Between Sitio Royalties and China Mengniu
Can any of the company-specific risk be diversified away by investing in both Sitio Royalties and China Mengniu 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 Sitio Royalties and China Mengniu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitio Royalties Corp and China Mengniu Dairy, you can compare the effects of market volatilities on Sitio Royalties and China Mengniu 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 Sitio Royalties with a short position of China Mengniu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitio Royalties and China Mengniu.
Diversification Opportunities for Sitio Royalties and China Mengniu
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sitio and China is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sitio Royalties Corp and China Mengniu Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mengniu Dairy and Sitio Royalties 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 Sitio Royalties Corp are associated (or correlated) with China Mengniu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mengniu Dairy has no effect on the direction of Sitio Royalties i.e., Sitio Royalties and China Mengniu go up and down completely randomly.
Pair Corralation between Sitio Royalties and China Mengniu
Considering the 90-day investment horizon Sitio Royalties is expected to generate 2.64 times less return on investment than China Mengniu. But when comparing it to its historical volatility, Sitio Royalties Corp is 2.59 times less risky than China Mengniu. It trades about 0.11 of its potential returns per unit of risk. China Mengniu Dairy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,634 in China Mengniu Dairy on September 2, 2024 and sell it today you would earn a total of 510.00 from holding China Mengniu Dairy or generate 31.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitio Royalties Corp vs. China Mengniu Dairy
Performance |
| Timeline |
| Sitio Royalties Corp |
| China Mengniu Dairy |
Sitio Royalties and China Mengniu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitio Royalties and China Mengniu
The main advantage of trading using opposite Sitio Royalties and China Mengniu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitio Royalties position performs unexpectedly, China Mengniu 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 China Mengniu will offset losses from the drop in China Mengniu's long position.| Sitio Royalties vs. Black Stone Minerals | Sitio Royalties vs. Dorchester Minerals LP | Sitio Royalties vs. MV Oil Trust | Sitio Royalties vs. VOC Energy Trust |
| China Mengniu vs. The A2 Milk | China Mengniu vs. Artisan Consumer Goods | China Mengniu vs. General Mills |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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