Correlation Between SandRidge Energy and ConocoPhillips

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

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

Diversification Opportunities for SandRidge Energy and ConocoPhillips

0.46

Correlation Coefficient

SandRidge Energy  ConocoPhillips

Very weak diversification

The 3 months correlation between SandRidge and ConocoPhillips is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and SandRidge 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 SandRidge Energy are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of SandRidge Energy i.e., SandRidge Energy and ConocoPhillips go up and down completely randomly.

Pair Corralation between SandRidge Energy and ConocoPhillips

Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 1.42 times more return on investment than ConocoPhillips. However, SandRidge Energy is 1.42 times more volatile than ConocoPhillips. It trades about 0.08 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.05 per unit of risk. If you would invest  1,063  in SandRidge Energy on July 4, 2025 and sell it today you would earn a total of  107.00  from holding SandRidge Energy or generate 10.07% return on investment over 90 days.

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

SandRidge Energy  vs.  ConocoPhillips

SandRidge Energy

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in SandRidge Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SandRidge Energy may actually be approaching a critical reversion point that can send shares even higher in November 2025.

ConocoPhillips

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SandRidge Energy and ConocoPhillips

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

The idea behind SandRidge Energy and ConocoPhillips 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.