Correlation Between Coterra Energy and Matador Resources
Can any of the company-specific risk be diversified away by investing in both Coterra Energy and Matador 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 Coterra Energy and Matador Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coterra Energy and Matador Resources, you can compare the effects of market volatilities on Coterra Energy and Matador 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 Coterra Energy with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coterra Energy and Matador Resources.
Diversification Opportunities for Coterra Energy and Matador Resources
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Coterra and Matador is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Coterra Energy and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources and Coterra 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 Coterra Energy are associated (or correlated) with Matador Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Resources has no effect on the direction of Coterra Energy i.e., Coterra Energy and Matador Resources go up and down completely randomly.
Pair Corralation between Coterra Energy and Matador Resources
Given the investment horizon of 90 days Coterra Energy is expected to generate 1.16 times more return on investment than Matador Resources. However, Coterra Energy is 1.16 times more volatile than Matador Resources. It trades about 0.17 of its potential returns per unit of risk. Matador Resources is currently generating about 0.0 per unit of risk. If you would invest 2,614 in Coterra Energy on November 3, 2024 and sell it today you would earn a total of 158.00 from holding Coterra Energy or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coterra Energy vs. Matador Resources
Performance |
| Timeline |
| Coterra Energy |
| Matador Resources |
Coterra Energy and Matador Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coterra Energy and Matador Resources
The main advantage of trading using opposite Coterra Energy and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coterra Energy position performs unexpectedly, Matador 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 Matador Resources will offset losses from the drop in Matador Resources' long position.| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
| Matador Resources vs. Murphy Oil | Matador Resources vs. Civitas Resources | Matador Resources vs. Permian Resources | Matador Resources vs. Antero Resources Corp |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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