Correlation Between ConocoPhillips and SM Energy
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and SM 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 ConocoPhillips and SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and SM Energy Co, you can compare the effects of market volatilities on ConocoPhillips and SM 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 ConocoPhillips with a short position of SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and SM Energy.
Diversification Opportunities for ConocoPhillips and SM Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ConocoPhillips and SM Energy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and SM Energy go up and down completely randomly.
Pair Corralation between ConocoPhillips and SM Energy
Considering the 90-day investment horizon ConocoPhillips is expected to generate 1.28 times less return on investment than SM Energy. But when comparing it to its historical volatility, ConocoPhillips is 1.44 times less risky than SM Energy. It trades about 0.36 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,127 in SM Energy Co on January 24, 2024 and sell it today you would earn a total of 854.00 from holding SM Energy Co or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. SM Energy Co
Performance |
| Timeline |
| ConocoPhillips |
| SM Energy |
ConocoPhillips and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and SM Energy
The main advantage of trading using opposite ConocoPhillips and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, SM 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 SM Energy will offset losses from the drop in SM Energy's long position.| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. Pioneer Natural Resources | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation |
| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |