Correlation Between Sable Offshore and MUNRE

Can any of the company-specific risk be diversified away by investing in both Sable Offshore and MUNRE 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 MUNRE 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 MUNRE 5875 23 MAY 42, you can compare the effects of market volatilities on Sable Offshore and MUNRE 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 MUNRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and MUNRE.

Diversification Opportunities for Sable Offshore and MUNRE

-0.01

Correlation Coefficient

Sable Offshore  MUNRE

Good diversification

The 3 months correlation between Sable and MUNRE is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and MUNRE 5875 23 MAY 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUNRE 5875 23 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 MUNRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUNRE 5875 23 has no effect on the direction of Sable Offshore i.e., Sable Offshore and MUNRE go up and down completely randomly.

Pair Corralation between Sable Offshore and MUNRE

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 10.9 times more return on investment than MUNRE. However, Sable Offshore is 10.9 times more volatile than MUNRE 5875 23 MAY 42. It trades about 0.06 of its potential returns per unit of risk. MUNRE 5875 23 MAY 42 is currently generating about -0.14 per unit of risk. If you would invest  2,252  in Sable Offshore Corp on December 22, 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 Against
Strength	Insignificant
Accuracy	38.33%
Values	Daily Returns

Sable Offshore Corp  vs.  MUNRE 5875 23 MAY 42

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 fragile basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

MUNRE 5875 23

Risk-Adjusted Performance

Very Weak

Over the last 90 days MUNRE 5875 23 MAY 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MUNRE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sable Offshore and MUNRE

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

The idea behind Sable Offshore Corp and MUNRE 5875 23 MAY 42 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.