Correlation Between GeoPark and Matador Resources
Can any of the company-specific risk be diversified away by investing in both GeoPark 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 GeoPark and Matador Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeoPark and Matador Resources, you can compare the effects of market volatilities on GeoPark 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 GeoPark with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and Matador Resources.
Diversification Opportunities for GeoPark and Matador Resources
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GeoPark and Matador is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources and GeoPark 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 GeoPark 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 GeoPark i.e., GeoPark and Matador Resources go up and down completely randomly.
Pair Corralation between GeoPark and Matador Resources
Given the investment horizon of 90 days GeoPark is expected to generate 1.53 times more return on investment than Matador Resources. However, GeoPark is 1.53 times more volatile than Matador Resources. It trades about 0.39 of its potential returns per unit of risk. Matador Resources is currently generating about 0.25 per unit of risk. If you would invest 795.00 in GeoPark on September 4, 2024 and sell it today you would earn a total of 246.00 from holding GeoPark or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GeoPark vs. Matador Resources
Performance |
| Timeline |
| GeoPark |
| Matador Resources |
GeoPark and Matador Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeoPark and Matador Resources
The main advantage of trading using opposite GeoPark and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoPark 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.| GeoPark vs. Evolution Petroleum | GeoPark vs. Granite Ridge Resources | GeoPark vs. PHX Minerals | GeoPark vs. California Resources Corp |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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