Correlation Between Sable Offshore and WT Offshore

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

Diversification Opportunities for Sable Offshore and WT Offshore

0.5

Correlation Coefficient

Sable Offshore  WT Offshore

Very weak diversification

The 3 months correlation between Sable and WTI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Sable Offshore i.e., Sable Offshore and WT Offshore go up and down completely randomly.

Pair Corralation between Sable Offshore and WT Offshore

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.57 times more return on investment than WT Offshore. However, Sable Offshore is 1.57 times more volatile than WT Offshore. It trades about 0.06 of its potential returns per unit of risk. WT Offshore is currently generating about 0.04 per unit of risk. If you would invest  2,379  in Sable Offshore Corp on December 26, 2024 and sell it today you would earn a total of  255.00  from holding Sable Offshore Corp or generate 10.72% return on investment over 90 days.

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

Sable Offshore Corp  vs.  WT Offshore

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

WT Offshore

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WT Offshore are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, WT Offshore may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sable Offshore and WT Offshore

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

The idea behind Sable Offshore Corp and WT Offshore 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.