Correlation Between Sitio Royalties and EON Resources

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

Diversification Opportunities for Sitio Royalties and EON Resources

-0.32

Correlation Coefficient

Sitio Royalties  EON Resources

Very good diversification

The 3 months correlation between Sitio and EON is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sitio Royalties Corp and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources 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 EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Sitio Royalties i.e., Sitio Royalties and EON Resources go up and down completely randomly.

Pair Corralation between Sitio Royalties and EON Resources

Considering the 90-day investment horizon Sitio Royalties Corp is expected to generate 0.12 times more return on investment than EON Resources. However, Sitio Royalties Corp is 8.66 times less risky than EON Resources. It trades about 0.11 of its potential returns per unit of risk. EON Resources is currently generating about 0.0 per unit of risk. If you would invest  2,097  in Sitio Royalties Corp on September 1, 2024 and sell it today you would earn a total of  273.00  from holding Sitio Royalties Corp or generate 13.02% return on investment over 90 days.

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

Sitio Royalties Corp  vs.  EON Resources

Sitio Royalties Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sitio Royalties Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Sitio Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

EON Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sitio Royalties and EON Resources

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

The idea behind Sitio Royalties Corp and EON Resources 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.