Correlation Between Spindletop and Savoy Energy

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

By analyzing existing cross correlation between Spindletop OG and Savoy Energy Corp, you can compare the effects of market volatilities on Spindletop and Savoy Energy 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 Savoy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spindletop and Savoy Energy.

Diversification Opportunities for Spindletop and Savoy Energy

0.0

Correlation Coefficient

Spindletop  Savoy Energy

Pay attention - limited upside

The 3 months correlation between Spindletop and Savoy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spindletop OG and Savoy Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savoy Energy Corp 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 Savoy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savoy Energy Corp has no effect on the direction of Spindletop i.e., Spindletop and Savoy Energy go up and down completely randomly.

Pair Corralation between Spindletop and Savoy Energy

Given the investment horizon of 90 days Spindletop OG is expected to under-perform the Savoy Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Spindletop OG is 9.62 times less risky than Savoy Energy. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Savoy Energy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Savoy Energy Corp on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Savoy Energy Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spindletop OG  vs.  Savoy Energy Corp

Spindletop OG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spindletop OG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Savoy Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Savoy Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Savoy Energy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Spindletop and Savoy Energy

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

The idea behind Spindletop OG and Savoy Energy Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.