Correlation Between Spindletop and Sky Petroleum
Can any of the company-specific risk be diversified away by investing in both Spindletop and Sky Petroleum 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 Spindletop and Sky Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spindletop OG and Sky Petroleum, you can compare the effects of market volatilities on Spindletop and Sky Petroleum 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 Spindletop with a short position of Sky Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spindletop and Sky Petroleum.
Diversification Opportunities for Spindletop and Sky Petroleum
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spindletop and Sky is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Spindletop OG and Sky Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Petroleum and Spindletop 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 Spindletop OG are associated (or correlated) with Sky Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Petroleum has no effect on the direction of Spindletop i.e., Spindletop and Sky Petroleum go up and down completely randomly.
Pair Corralation between Spindletop and Sky Petroleum
Given the investment horizon of 90 days Spindletop OG is expected to under-perform the Sky Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Spindletop OG is 12.6 times less risky than Sky Petroleum. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Sky Petroleum is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Sky Petroleum on September 23, 2024 and sell it today you would lose (5.98) from holding Sky Petroleum or give up 99.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Spindletop OG vs. Sky Petroleum
Performance |
Timeline |
Spindletop OG |
Sky Petroleum |
Spindletop and Sky Petroleum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spindletop and Sky Petroleum
The main advantage of trading using opposite Spindletop and Sky Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spindletop position performs unexpectedly, Sky Petroleum 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 Sky Petroleum will offset losses from the drop in Sky Petroleum's long position.Spindletop vs. Stamper Oil Gas | Spindletop vs. Valeura Energy | Spindletop vs. Invictus Energy Limited | Spindletop vs. Africa Oil Corp |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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