Correlation Between Southwestern Energy and Vital Energy

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

By analyzing existing cross correlation between Southwestern Energy and Vital Energy, you can compare the effects of market volatilities on Southwestern Energy and Vital 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 Southwestern Energy with a short position of Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwestern Energy and Vital Energy.

Diversification Opportunities for Southwestern Energy and Vital Energy

0.0

Correlation Coefficient

Southwestern Energy  Vital Energy

Pay attention - limited upside

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

Pair Corralation between Southwestern Energy and Vital Energy

If you would invest (100.00) in Southwestern Energy on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Southwestern Energy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Southwestern Energy  vs.  Vital Energy

Southwestern Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southwestern Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Southwestern Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Vital Energy

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Southwestern Energy and Vital Energy

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

The idea behind Southwestern Energy and Vital Energy 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 Commodity Directory module to find actively traded commodities issued by global exchanges.