Correlation Between MDM Permian and Continental Energy
Can any of the company-specific risk be diversified away by investing in both MDM Permian and Continental Energy 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 MDM Permian and Continental Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MDM Permian and Continental Energy, you can compare the effects of market volatilities on MDM Permian and Continental Energy 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 MDM Permian with a short position of Continental Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MDM Permian and Continental Energy.
Diversification Opportunities for MDM Permian and Continental Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MDM and Continental is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MDM Permian and Continental Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Energy and MDM Permian 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 MDM Permian are associated (or correlated) with Continental Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Energy has no effect on the direction of MDM Permian i.e., MDM Permian and Continental Energy go up and down completely randomly.
Pair Corralation between MDM Permian and Continental Energy
If you would invest 2.20 in MDM Permian on August 31, 2024 and sell it today you would lose (1.10) from holding MDM Permian or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 13.2% |
| Values | Daily Returns |
MDM Permian vs. Continental Energy
Performance |
| Timeline |
| MDM Permian |
| Continental Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MDM Permian and Continental Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MDM Permian and Continental Energy
The main advantage of trading using opposite MDM Permian and Continental Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDM Permian position performs unexpectedly, Continental Energy 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 Continental Energy will offset losses from the drop in Continental Energy's long position.| MDM Permian vs. Permian Resources | MDM Permian vs. Devon Energy | MDM Permian vs. EOG Resources | MDM Permian vs. Coterra Energy |
| Continental Energy vs. Strat Petroleum | Continental Energy vs. Imperial Res | Continental Energy vs. Century Petroleum 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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