Correlation Between Sitio Royalties and Aeroports

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

By analyzing existing cross correlation between Sitio Royalties Corp and Aeroports de Paris, you can compare the effects of market volatilities on Sitio Royalties and Aeroports 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 Sitio Royalties with a short position of Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitio Royalties and Aeroports.

Diversification Opportunities for Sitio Royalties and Aeroports

-0.43

Correlation Coefficient

Sitio Royalties  Aeroports

Very good diversification

The 3 months correlation between Sitio and Aeroports is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sitio Royalties Corp and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris and Sitio Royalties 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 Sitio Royalties Corp are associated (or correlated) with Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Sitio Royalties i.e., Sitio Royalties and Aeroports go up and down completely randomly.

Pair Corralation between Sitio Royalties and Aeroports

Considering the 90-day investment horizon Sitio Royalties Corp is expected to generate 0.76 times more return on investment than Aeroports. However, Sitio Royalties Corp is 1.31 times less risky than Aeroports. It trades about 0.09 of its potential returns per unit of risk. Aeroports de Paris is currently generating about 0.05 per unit of risk. If you would invest  1,845  in Sitio Royalties Corp on December 29, 2024 and sell it today you would earn a total of  175.00  from holding Sitio Royalties Corp or generate 9.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Sitio Royalties Corp  vs.  Aeroports de Paris

Sitio Royalties Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sitio Royalties Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Sitio Royalties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aeroports de Paris

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aeroports de Paris are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aeroports may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sitio Royalties and Aeroports

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

The idea behind Sitio Royalties Corp and Aeroports de Paris 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.