Correlation Between Sable Offshore and MSP Recovery

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

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

Diversification Opportunities for Sable Offshore and MSP Recovery

0.19

Correlation Coefficient

Sable Offshore  MSP Recovery

Average diversification

The 3 months correlation between Sable and MSP is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Sable Offshore i.e., Sable Offshore and MSP Recovery go up and down completely randomly.

Pair Corralation between Sable Offshore and MSP Recovery

Considering the 90-day investment horizon Sable Offshore is expected to generate 107.92 times less return on investment than MSP Recovery. But when comparing it to its historical volatility, Sable Offshore Corp is 6.78 times less risky than MSP Recovery. It trades about 0.02 of its potential returns per unit of risk. MSP Recovery is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  169.00  in MSP Recovery on September 18, 2024 and sell it today you would earn a total of  155.00  from holding MSP Recovery or generate 91.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Sable Offshore Corp  vs.  MSP Recovery

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MSP Recovery

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MSP Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile technical and fundamental indicators, MSP Recovery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sable Offshore and MSP Recovery

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

The idea behind Sable Offshore Corp and MSP Recovery 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.