Correlation Between Santa Fe and Brookside Energy

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

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

Diversification Opportunities for Santa Fe and Brookside Energy

0.0

Correlation Coefficient

Santa Fe  Brookside Energy

Pay attention - limited upside

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

Pair Corralation between Santa Fe and Brookside Energy

If you would invest  28.00  in Brookside Energy on October 1, 2024 and sell it today you would earn a total of  5.00  from holding Brookside Energy or generate 17.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Santa Fe Petroleum  vs.  Brookside Energy

Santa Fe Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santa Fe Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Santa Fe is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Brookside Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookside Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Brookside Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Santa Fe and Brookside Energy

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

The idea behind Santa Fe Petroleum and Brookside Energy 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.