Correlation Between XXL Energy and SM Energy
Can any of the company-specific risk be diversified away by investing in both XXL Energy and SM Energy 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 XXL Energy and SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL Energy Corp and SM Energy Co, you can compare the effects of market volatilities on XXL Energy and SM Energy 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 XXL Energy with a short position of SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL Energy and SM Energy.
Diversification Opportunities for XXL Energy and SM Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between XXL and SM Energy is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding XXL Energy Corp and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and XXL 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 XXL Energy Corp are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of XXL Energy i.e., XXL Energy and SM Energy go up and down completely randomly.
Pair Corralation between XXL Energy and SM Energy
Assuming the 90 days horizon XXL Energy Corp is expected to under-perform the SM Energy. In addition to that, XXL Energy is 2.19 times more volatile than SM Energy Co. It trades about -0.03 of its total potential returns per unit of risk. SM Energy Co is currently generating about 0.03 per unit of volatility. If you would invest 3,784 in SM Energy Co on August 24, 2024 and sell it today you would earn a total of 762.00 from holding SM Energy Co or generate 20.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XXL Energy Corp vs. SM Energy Co
Performance |
| Timeline |
| XXL Energy Corp |
| SM Energy |
XXL Energy and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL Energy and SM Energy
The main advantage of trading using opposite XXL Energy and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL Energy position performs unexpectedly, SM Energy 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 SM Energy will offset losses from the drop in SM Energy's long position.| XXL Energy vs. East Africa Metals | XXL Energy vs. ABIVAX Socit Anonyme | XXL Energy vs. SCOR PK | XXL Energy vs. HUMANA INC |
| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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