Correlation Between Vaalco Energy and Matador Resources
Can any of the company-specific risk be diversified away by investing in both Vaalco 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 Vaalco 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 Vaalco Energy and Matador Resources, you can compare the effects of market volatilities on Vaalco 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 Vaalco Energy with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaalco Energy and Matador Resources.
Diversification Opportunities for Vaalco Energy and Matador Resources
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vaalco and Matador is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources and Vaalco 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 Vaalco 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 Vaalco Energy i.e., Vaalco Energy and Matador Resources go up and down completely randomly.
Pair Corralation between Vaalco Energy and Matador Resources
Considering the 90-day investment horizon Vaalco Energy is expected to under-perform the Matador Resources. But the stock apears to be less risky and, when comparing its historical volatility, Vaalco Energy is 1.22 times less risky than Matador Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Matador Resources is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 5,047 in Matador Resources on August 28, 2024 and sell it today you would earn a total of 872.00 from holding Matador Resources or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vaalco Energy vs. Matador Resources
Performance |
| Timeline |
| Vaalco Energy |
| Matador Resources |
Vaalco Energy and Matador Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vaalco Energy and Matador Resources
The main advantage of trading using opposite Vaalco Energy and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaalco 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.| Vaalco Energy vs. Epsilon Energy | Vaalco Energy vs. PHX Minerals | Vaalco Energy vs. Northern Oil Gas | Vaalco Energy vs. Gran Tierra Energy |
| 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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