Correlation Between FactSet Research and Sitio Royalties

Can any of the company-specific risk be diversified away by investing in both FactSet Research and Sitio Royalties 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 FactSet Research and Sitio Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FactSet Research Systems and Sitio Royalties Corp, you can compare the effects of market volatilities on FactSet Research and Sitio Royalties 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 FactSet Research with a short position of Sitio Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of FactSet Research and Sitio Royalties.

Diversification Opportunities for FactSet Research and Sitio Royalties

0.26

Correlation Coefficient

FactSet Research  Sitio Royalties

Modest diversification

The 3 months correlation between FactSet and Sitio is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Sitio Royalties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitio Royalties Corp and FactSet Research 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 FactSet Research Systems are associated (or correlated) with Sitio Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitio Royalties Corp has no effect on the direction of FactSet Research i.e., FactSet Research and Sitio Royalties go up and down completely randomly.

Pair Corralation between FactSet Research and Sitio Royalties

Considering the 90-day investment horizon FactSet Research Systems is expected to generate 0.64 times more return on investment than Sitio Royalties. However, FactSet Research Systems is 1.57 times less risky than Sitio Royalties. It trades about -0.16 of its potential returns per unit of risk. Sitio Royalties Corp is currently generating about -0.24 per unit of risk. If you would invest  47,062  in FactSet Research Systems on November 29, 2024 and sell it today you would lose (1,591) from holding FactSet Research Systems or give up 3.38% of portfolio value over 90 days.

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

FactSet Research Systems  vs.  Sitio Royalties Corp

FactSet Research Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sitio Royalties Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sitio Royalties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with FactSet Research and Sitio Royalties

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

The idea behind FactSet Research Systems and Sitio Royalties Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.