Correlation Between Southwestern Energy and Cimarex Energy

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

Diversification Opportunities for Southwestern Energy and Cimarex Energy

0.0

Correlation Coefficient

Southwestern Energy  Cimarex Energy

Pay attention - limited upside

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

Pair Corralation between Southwestern Energy and Cimarex Energy

If you would invest  736.00  in Southwestern Energy on January 25, 2024 and sell it today you would earn a total of  23.00  from holding Southwestern Energy or generate 3.13% return on investment over 90 days.

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

Southwestern Energy  vs.  Cimarex Energy Co

Southwestern Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Southwestern Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Southwestern Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Cimarex Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimarex Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Cimarex Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Southwestern Energy and Cimarex Energy

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

The idea behind Southwestern Energy and Cimarex Energy Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.