Correlation Between GulfSlope Energy and SandRidge Mississippian

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

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

Diversification Opportunities for GulfSlope Energy and SandRidge Mississippian

-0.64

Correlation Coefficient

GulfSlope Energy  SandRidge Mississippian

Excellent diversification

The 3 months correlation between GulfSlope and SandRidge is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding GulfSlope Energy and SandRidge Mississippian Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SandRidge Mississippian and GulfSlope 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 GulfSlope Energy are associated (or correlated) with SandRidge Mississippian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SandRidge Mississippian has no effect on the direction of GulfSlope Energy i.e., GulfSlope Energy and SandRidge Mississippian go up and down completely randomly.

Pair Corralation between GulfSlope Energy and SandRidge Mississippian

If you would invest  7.30  in SandRidge Mississippian Trust on February 4, 2024 and sell it today you would earn a total of  0.00  from holding SandRidge Mississippian Trust or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

GulfSlope Energy  vs.  SandRidge Mississippian Trust

GulfSlope Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GulfSlope Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SandRidge Mississippian

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days SandRidge Mississippian Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, SandRidge Mississippian unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GulfSlope Energy and SandRidge Mississippian

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

The idea behind GulfSlope Energy and SandRidge Mississippian Trust 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.