Correlation Between Vital Energy and SandRidge Energy

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

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

Diversification Opportunities for Vital Energy and SandRidge Energy

0.85

Correlation Coefficient

Vital Energy  SandRidge Energy

Very poor diversification

The 3 months correlation between Vital and SandRidge is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and SandRidge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SandRidge Energy and Vital 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 Vital Energy are associated (or correlated) with SandRidge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SandRidge Energy has no effect on the direction of Vital Energy i.e., Vital Energy and SandRidge Energy go up and down completely randomly.

Pair Corralation between Vital Energy and SandRidge Energy

Given the investment horizon of 90 days Vital Energy is expected to generate 2.28 times more return on investment than SandRidge Energy. However, Vital Energy is 2.28 times more volatile than SandRidge Energy. It trades about 0.1 of its potential returns per unit of risk. SandRidge Energy is currently generating about 0.09 per unit of risk. If you would invest  1,479  in Vital Energy on May 2, 2025 and sell it today you would earn a total of  390.00  from holding Vital Energy or generate 26.37% return on investment over 90 days.

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

Vital Energy  vs.  SandRidge Energy

Vital Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

SandRidge Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SandRidge Energy are ranked lower than 7 (%) 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 August 2025.

Pair Trading with Vital Energy and SandRidge Energy

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

The idea behind Vital Energy and SandRidge 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.