Correlation Between Granite Ridge and Matador Resources
Can any of the company-specific risk be diversified away by investing in both Granite Ridge 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 Granite Ridge and Matador Resources 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 Matador Resources, you can compare the effects of market volatilities on Granite Ridge 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 Granite Ridge with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and Matador Resources.
Diversification Opportunities for Granite Ridge and Matador Resources
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Granite and Matador is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources 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 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 Granite Ridge i.e., Granite Ridge and Matador Resources go up and down completely randomly.
Pair Corralation between Granite Ridge and Matador Resources
Given the investment horizon of 90 days Granite Ridge is expected to generate 2.31 times less return on investment than Matador Resources. In addition to that, Granite Ridge is 1.24 times more volatile than Matador Resources. It trades about 0.01 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 5,616 in Matador Resources on September 4, 2024 and sell it today you would earn a total of 273.00 from holding Matador Resources or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Ridge Resources vs. Matador Resources
Performance |
| Timeline |
| Granite Ridge Resources |
| Matador Resources |
Granite Ridge and Matador Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and Matador Resources
The main advantage of trading using opposite Granite Ridge and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge 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.| Granite Ridge vs. Epsilon Energy | Granite Ridge vs. Gulfport Energy Operating | Granite Ridge vs. North European Oil | Granite Ridge vs. PHX Minerals |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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