Correlation Between Vivakor and SM Energy

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

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

Diversification Opportunities for Vivakor and SM Energy

-0.73

Correlation Coefficient

Vivakor  SM Energy

Pay attention - limited upside

The 3 months correlation between Vivakor and SM Energy is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vivakor and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Energy and Vivakor 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 Vivakor 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 Vivakor i.e., Vivakor and SM Energy go up and down completely randomly.

Pair Corralation between Vivakor and SM Energy

Given the investment horizon of 90 days Vivakor is expected to under-perform the SM Energy. In addition to that, Vivakor is 2.3 times more volatile than SM Energy Co. It trades about 0.0 of its total potential returns per unit of risk. SM Energy Co is currently generating about 0.04 per unit of volatility. If you would invest  3,401  in SM Energy Co on January 17, 2024 and sell it today you would earn a total of  1,641  from holding SM Energy Co or generate 48.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vivakor  vs.  SM Energy Co

Vivakor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivakor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Vivakor is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

SM Energy

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SM Energy Co are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, SM Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vivakor and SM Energy

The main advantage of trading using opposite Vivakor and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivakor 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.

The idea behind Vivakor and SM 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.