Correlation Between Saturn Oil and Vital Energy

Can any of the company-specific risk be diversified away by investing in both Saturn Oil and Vital 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 Saturn Oil and Vital Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saturn Oil Gas and Vital Energy, you can compare the effects of market volatilities on Saturn Oil and Vital 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 Saturn Oil with a short position of Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saturn Oil and Vital Energy.

Diversification Opportunities for Saturn Oil and Vital Energy

0.07

Correlation Coefficient

Saturn Oil  Vital Energy

Significant diversification

The 3 months correlation between Saturn and Vital is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Saturn Oil Gas and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Energy and Saturn Oil 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 Saturn Oil Gas are associated (or correlated) with Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of Saturn Oil i.e., Saturn Oil and Vital Energy go up and down completely randomly.

Pair Corralation between Saturn Oil and Vital Energy

Assuming the 90 days horizon Saturn Oil Gas is expected to generate 0.88 times more return on investment than Vital Energy. However, Saturn Oil Gas is 1.13 times less risky than Vital Energy. It trades about 0.0 of its potential returns per unit of risk. Vital Energy is currently generating about -0.02 per unit of risk. If you would invest  177.00  in Saturn Oil Gas on October 26, 2024 and sell it today you would lose (26.00) from holding Saturn Oil Gas or give up 14.69% of portfolio value over 90 days.

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

Saturn Oil Gas  vs.  Vital Energy

Saturn Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saturn Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Saturn Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vital Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saturn Oil and Vital Energy

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

The idea behind Saturn Oil Gas and Vital Energy 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 Commodity Directory module to find actively traded commodities issued by global exchanges.