Correlation Between Sitio Royalties and San Juan

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

Diversification Opportunities for Sitio Royalties and San Juan

0.32

Correlation Coefficient

Sitio Royalties  San Juan

Weak diversification

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

Pair Corralation between Sitio Royalties and San Juan

Considering the 90-day investment horizon Sitio Royalties Corp is expected to under-perform the San Juan. But the stock apears to be less risky and, when comparing its historical volatility, Sitio Royalties Corp is 1.48 times less risky than San Juan. The stock trades about -0.07 of its potential returns per unit of risk. The San Juan Basin is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  425.00  in San Juan Basin on October 10, 2024 and sell it today you would lose (13.00) from holding San Juan Basin or give up 3.06% of portfolio value over 90 days.

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

Sitio Royalties Corp  vs.  San Juan Basin

Sitio Royalties Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sitio Royalties Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

San Juan Basin

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Juan Basin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking indicators, San Juan may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sitio Royalties and San Juan

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

The idea behind Sitio Royalties Corp and San Juan Basin 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.