Correlation Between SilverBow Resources and Denbury Resources

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

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

Diversification Opportunities for SilverBow Resources and Denbury Resources

0.04

Correlation Coefficient

SilverBow Resources  Denbury Resources

Significant diversification

The 3 months correlation between SilverBow and Denbury is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SilverBow Resources and Denbury Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denbury Resources and SilverBow Resources 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 SilverBow Resources are associated (or correlated) with Denbury Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denbury Resources has no effect on the direction of SilverBow Resources i.e., SilverBow Resources and Denbury Resources go up and down completely randomly.

Pair Corralation between SilverBow Resources and Denbury Resources

If you would invest  8,653  in Denbury Resources on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Denbury Resources or generate 0.0% return on investment over 90 days.

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

SilverBow Resources  vs.  Denbury Resources

SilverBow Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverBow Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SilverBow Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Denbury Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denbury Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Denbury Resources is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SilverBow Resources and Denbury Resources

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

The idea behind SilverBow Resources and Denbury Resources 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.