Correlation Between Energy Absolute and Sherwood Public

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Can any of the company-specific risk be diversified away by investing in both Energy Absolute and Sherwood Public 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 Energy Absolute and Sherwood Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Absolute Public and Sherwood Public, you can compare the effects of market volatilities on Energy Absolute and Sherwood Public 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 Energy Absolute with a short position of Sherwood Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Absolute and Sherwood Public.

Diversification Opportunities for Energy Absolute and Sherwood Public

EnergySherwoodDiversified AwayEnergySherwoodDiversified Away100%
0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Energy and Sherwood is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and Sherwood Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwood Public and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with Sherwood Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherwood Public has no effect on the direction of Energy Absolute i.e., Energy Absolute and Sherwood Public go up and down completely randomly.

Pair Corralation between Energy Absolute and Sherwood Public

Assuming the 90 days horizon Energy Absolute Public is expected to under-perform the Sherwood Public. In addition to that, Energy Absolute is 2.02 times more volatile than Sherwood Public. It trades about -0.08 of its total potential returns per unit of risk. Sherwood Public is currently generating about -0.07 per unit of volatility. If you would invest  310.00  in Sherwood Public on November 24, 2024 and sell it today you would lose (42.00) from holding Sherwood Public or give up 13.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.36%
ValuesDaily Returns

Energy Absolute Public  vs.  Sherwood Public

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-10010
JavaScript chart by amCharts 3.21.15EA SWC
       Timeline  
Energy Absolute Public 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Energy Absolute Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.533.544.5
Sherwood Public 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sherwood Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.62.72.82.933.1

Energy Absolute and Sherwood Public Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.02-6.76-4.49-2.23-0.03782.024.126.218.310.4 0.020.030.040.05
JavaScript chart by amCharts 3.21.15EA SWC
       Returns  

Pair Trading with Energy Absolute and Sherwood Public

The main advantage of trading using opposite Energy Absolute and Sherwood Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Absolute position performs unexpectedly, Sherwood Public 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 Sherwood Public will offset losses from the drop in Sherwood Public's long position.
The idea behind Energy Absolute Public and Sherwood Public 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.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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