Correlation Between Magnolia Oil and Crescent Point
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Crescent Point 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 Crescent Point 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 Crescent Point Energy, you can compare the effects of market volatilities on Magnolia Oil and Crescent Point 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 Crescent Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Crescent Point.
Diversification Opportunities for Magnolia Oil and Crescent Point
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnolia and Crescent is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Crescent Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Point Energy 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 Crescent Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Point Energy has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Crescent Point go up and down completely randomly.
Pair Corralation between Magnolia Oil and Crescent Point
Considering the 90-day investment horizon Magnolia Oil is expected to generate 1.42 times less return on investment than Crescent Point. But when comparing it to its historical volatility, Magnolia Oil Gas is 1.15 times less risky than Crescent Point. It trades about 0.04 of its potential returns per unit of risk. Crescent Point Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 585.00 in Crescent Point Energy on August 30, 2024 and sell it today you would earn a total of 214.00 from holding Crescent Point Energy or generate 36.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.85% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Crescent Point Energy
Performance |
| Timeline |
| Magnolia Oil Gas |
| Crescent Point Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Magnolia Oil and Crescent Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Crescent Point
The main advantage of trading using opposite Magnolia Oil and Crescent Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Crescent Point 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 Crescent Point will offset losses from the drop in Crescent Point'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 |
| Crescent Point vs. Vermilion Energy | Crescent Point vs. Canadian Natural Resources | Crescent Point vs. Baytex Energy Corp | Crescent Point vs. Ovintiv |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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