Correlation Between SM Energy and Cabot Oil
Can any of the company-specific risk be diversified away by investing in both SM Energy and Cabot Oil 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 SM Energy and Cabot Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Energy Co and Cabot Oil Gas, you can compare the effects of market volatilities on SM Energy and Cabot Oil 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 SM Energy with a short position of Cabot Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Cabot Oil.
Diversification Opportunities for SM Energy and Cabot Oil
Pay attention - limited upside
The 3 months correlation between SM Energy and Cabot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Cabot Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot Oil Gas and SM 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 SM Energy Co are associated (or correlated) with Cabot Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot Oil Gas has no effect on the direction of SM Energy i.e., SM Energy and Cabot Oil go up and down completely randomly.
Pair Corralation between SM Energy and Cabot Oil
If you would invest 3,674 in SM Energy Co on January 25, 2024 and sell it today you would earn a total of 1,307 from holding SM Energy Co or generate 35.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
SM Energy Co vs. Cabot Oil Gas
Performance |
Timeline |
SM Energy |
Cabot Oil Gas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SM Energy and Cabot Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SM Energy and Cabot Oil
The main advantage of trading using opposite SM Energy and Cabot Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, Cabot Oil 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 Cabot Oil will offset losses from the drop in Cabot Oil's long position.SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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