Correlation Between Magnolia Oil and Coastal Caribbean
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Coastal Caribbean 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 Magnolia Oil and Coastal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnolia Oil Gas and Coastal Caribbean Oils, you can compare the effects of market volatilities on Magnolia Oil and Coastal Caribbean 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 Magnolia Oil with a short position of Coastal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Coastal Caribbean.
Diversification Opportunities for Magnolia Oil and Coastal Caribbean
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magnolia and Coastal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Coastal Caribbean Oils in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Caribbean Oils and Magnolia Oil 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 Magnolia Oil Gas are associated (or correlated) with Coastal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Caribbean Oils has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Coastal Caribbean go up and down completely randomly.
Pair Corralation between Magnolia Oil and Coastal Caribbean
Considering the 90-day investment horizon Magnolia Oil is expected to generate 106.55 times less return on investment than Coastal Caribbean. But when comparing it to its historical volatility, Magnolia Oil Gas is 40.43 times less risky than Coastal Caribbean. It trades about 0.03 of its potential returns per unit of risk. Coastal Caribbean Oils is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Coastal Caribbean Oils on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Coastal Caribbean Oils or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.92% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Coastal Caribbean Oils
Performance |
| Timeline |
| Magnolia Oil Gas |
| Coastal Caribbean Oils |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Magnolia Oil and Coastal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Coastal Caribbean
The main advantage of trading using opposite Magnolia Oil and Coastal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Coastal Caribbean 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 Coastal Caribbean will offset losses from the drop in Coastal Caribbean's long position.| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador Resources |
| Coastal Caribbean vs. Strat Petroleum | Coastal Caribbean vs. Imperial Res | Coastal Caribbean 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |