Correlation Between Granite Ridge and Magnolia Oil
Can any of the company-specific risk be diversified away by investing in both Granite Ridge 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 Granite Ridge and Magnolia Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Ridge Resources and Magnolia Oil Gas, you can compare the effects of market volatilities on Granite Ridge 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 Granite Ridge with a short position of Magnolia Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Magnolia Oil.
Diversification Opportunities for Granite Ridge and Magnolia Oil
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and Magnolia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources 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 Granite Ridge 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 Granite Ridge Resources 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 Granite Ridge i.e., Granite Ridge and Magnolia Oil go up and down completely randomly.
Pair Corralation between Granite Ridge and Magnolia Oil
Given the investment horizon of 90 days Granite Ridge Resources is expected to under-perform the Magnolia Oil. But the stock apears to be less risky and, when comparing its historical volatility, Granite Ridge Resources is 1.27 times less risky than Magnolia Oil. The stock trades about -0.37 of its potential returns per unit of risk. The Magnolia Oil Gas is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 2,428 in Magnolia Oil Gas on November 9, 2024 and sell it today you would lose (132.00) from holding Magnolia Oil Gas or give up 5.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Ridge Resources vs. Magnolia Oil Gas
Performance |
| Timeline |
| Granite Ridge Resources |
| Magnolia Oil Gas |
Granite Ridge and Magnolia Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and Magnolia Oil
The main advantage of trading using opposite Granite Ridge and Magnolia Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge 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.| Granite Ridge vs. Epsilon Energy | Granite Ridge vs. Gulfport Energy Operating | Granite Ridge vs. North European Oil | Granite Ridge vs. PHX Minerals |
| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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