Correlation Between EQT and Magnolia Oil
Can any of the company-specific risk be diversified away by investing in both EQT and Magnolia Oil 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 EQT and Magnolia Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT Corporation and Magnolia Oil Gas, you can compare the effects of market volatilities on EQT and Magnolia Oil 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 EQT with a short position of Magnolia Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT and Magnolia Oil.
Diversification Opportunities for EQT and Magnolia Oil
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EQT and Magnolia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and Magnolia Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnolia Oil Gas and EQT 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 EQT Corporation are associated (or correlated) with Magnolia Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnolia Oil Gas has no effect on the direction of EQT i.e., EQT and Magnolia Oil go up and down completely randomly.
Pair Corralation between EQT and Magnolia Oil
Considering the 90-day investment horizon EQT Corporation is expected to generate 1.09 times more return on investment than Magnolia Oil. However, EQT is 1.09 times more volatile than Magnolia Oil Gas. It trades about 0.17 of its potential returns per unit of risk. Magnolia Oil Gas is currently generating about 0.07 per unit of risk. If you would invest 3,375 in EQT Corporation on August 27, 2024 and sell it today you would earn a total of 1,217 from holding EQT Corporation or generate 36.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT Corp. vs. Magnolia Oil Gas
Performance |
| Timeline |
| EQT Corporation |
| Magnolia Oil Gas |
EQT and Magnolia Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT and Magnolia Oil
The main advantage of trading using opposite EQT and Magnolia Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT position performs unexpectedly, Magnolia Oil 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 Magnolia Oil will offset losses from the drop in Magnolia Oil's long position.| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
| Magnolia Oil vs. Devon Energy | Magnolia Oil vs. ConocoPhillips | Magnolia Oil vs. Occidental Petroleum | Magnolia Oil vs. Permian Resources |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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