Correlation Between SM Energy and Intuitive Investments

Can any of the company-specific risk be diversified away by investing in both SM Energy and Intuitive Investments 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 Intuitive Investments 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 Intuitive Investments Group, you can compare the effects of market volatilities on SM Energy and Intuitive Investments 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 Intuitive Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Intuitive Investments.

Diversification Opportunities for SM Energy and Intuitive Investments

-0.59

Correlation Coefficient

SM Energy  Intuitive Investments

Excellent diversification

The 3 months correlation between 0KZA and Intuitive is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Intuitive Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Investments 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 Intuitive Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Investments has no effect on the direction of SM Energy i.e., SM Energy and Intuitive Investments go up and down completely randomly.

Pair Corralation between SM Energy and Intuitive Investments

Assuming the 90 days trading horizon SM Energy Co is expected to generate 2.0 times more return on investment than Intuitive Investments. However, SM Energy is 2.0 times more volatile than Intuitive Investments Group. It trades about 0.07 of its potential returns per unit of risk. Intuitive Investments Group is currently generating about -0.15 per unit of risk. If you would invest  4,137  in SM Energy Co on September 5, 2024 and sell it today you would earn a total of  347.00  from holding SM Energy Co or generate 8.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SM Energy Co  vs.  Intuitive Investments Group

SM Energy

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SM Energy Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SM Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intuitive Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intuitive Investments Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SM Energy and Intuitive Investments

The main advantage of trading using opposite SM Energy and Intuitive Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, Intuitive Investments 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 Intuitive Investments will offset losses from the drop in Intuitive Investments' long position.

The idea behind SM Energy Co and Intuitive Investments Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.