Correlation Between Sable Offshore and CROWN

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

By analyzing existing cross correlation between Sable Offshore Corp and CROWN CASTLE INTERNATIONAL, you can compare the effects of market volatilities on Sable Offshore and CROWN 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 Sable Offshore with a short position of CROWN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and CROWN.

Diversification Opportunities for Sable Offshore and CROWN

0.35

Correlation Coefficient

Sable Offshore  CROWN

Weak diversification

The 3 months correlation between Sable and CROWN is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Sable Offshore i.e., Sable Offshore and CROWN go up and down completely randomly.

Pair Corralation between Sable Offshore and CROWN

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 7.3 times more return on investment than CROWN. However, Sable Offshore is 7.3 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about 0.06 of its potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about -0.12 per unit of risk. If you would invest  2,252  in Sable Offshore Corp on December 23, 2024 and sell it today you would earn a total of  260.00  from holding Sable Offshore Corp or generate 11.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Sable Offshore Corp  vs.  CROWN CASTLE INTERNATIONAL

Sable Offshore Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CROWN CASTLE INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sable Offshore and CROWN

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

The idea behind Sable Offshore Corp and CROWN CASTLE INTERNATIONAL 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.