Correlation Between Sable Offshore and 98385XAM8

Can any of the company-specific risk be diversified away by investing in both Sable Offshore and 98385XAM8 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 98385XAM8 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 XTO ENERGY INC, you can compare the effects of market volatilities on Sable Offshore and 98385XAM8 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 98385XAM8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and 98385XAM8.

Diversification Opportunities for Sable Offshore and 98385XAM8

-0.34

Correlation Coefficient

Sable Offshore  98385XAM8

Very good diversification

The 3 months correlation between Sable and 98385XAM8 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and XTO ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTO ENERGY INC 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 98385XAM8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTO ENERGY INC has no effect on the direction of Sable Offshore i.e., Sable Offshore and 98385XAM8 go up and down completely randomly.

Pair Corralation between Sable Offshore and 98385XAM8

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 4.45 times more return on investment than 98385XAM8. However, Sable Offshore is 4.45 times more volatile than XTO ENERGY INC. It trades about 0.14 of its potential returns per unit of risk. XTO ENERGY INC is currently generating about 0.0 per unit of risk. If you would invest  2,069  in Sable Offshore Corp on October 25, 2024 and sell it today you would earn a total of  756.00  from holding Sable Offshore Corp or generate 36.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.1%
Values	Daily Returns

Sable Offshore Corp  vs.  XTO ENERGY INC

Sable Offshore Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 11 (%) 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.

XTO ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTO ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 98385XAM8 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sable Offshore and 98385XAM8

The main advantage of trading using opposite Sable Offshore and 98385XAM8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore position performs unexpectedly, 98385XAM8 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 98385XAM8 will offset losses from the drop in 98385XAM8's long position.

The idea behind Sable Offshore Corp and XTO ENERGY INC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.