Correlation Between EON Resources and Matador Resources
Can any of the company-specific risk be diversified away by investing in both EON Resources 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 EON Resources and Matador Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EON Resources and Matador Resources, you can compare the effects of market volatilities on EON Resources 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 EON Resources with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON Resources and Matador Resources.
Diversification Opportunities for EON Resources and Matador Resources
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EON and Matador is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources and EON Resources 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 EON Resources 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 EON Resources i.e., EON Resources and Matador Resources go up and down completely randomly.
Pair Corralation between EON Resources and Matador Resources
Given the investment horizon of 90 days EON Resources is expected to under-perform the Matador Resources. In addition to that, EON Resources is 3.04 times more volatile than Matador Resources. It trades about -0.09 of its total potential returns per unit of risk. Matador Resources is currently generating about -0.02 per unit of volatility. If you would invest 5,704 in Matador Resources on September 12, 2024 and sell it today you would lose (81.00) from holding Matador Resources or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
EON Resources vs. Matador Resources
Performance |
| Timeline |
| EON Resources |
| Matador Resources |
EON Resources and Matador Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EON Resources and Matador Resources
The main advantage of trading using opposite EON Resources and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON Resources 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.| EON Resources vs. Lululemon Athletica | EON Resources vs. Weyco Group | EON Resources vs. Sea | EON Resources vs. Kite Realty Group |
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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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