Correlation Between Magnolia Oil and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Coterra 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 Magnolia Oil and Coterra Energy 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 Coterra Energy, you can compare the effects of market volatilities on Magnolia Oil and Coterra 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 Magnolia Oil with a short position of Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Coterra Energy.
Diversification Opportunities for Magnolia Oil and Coterra Energy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Magnolia and Coterra is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra 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 Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Coterra Energy go up and down completely randomly.
Pair Corralation between Magnolia Oil and Coterra Energy
Considering the 90-day investment horizon Magnolia Oil Gas is expected to under-perform the Coterra Energy. In addition to that, Magnolia Oil is 1.37 times more volatile than Coterra Energy. It trades about -0.08 of its total potential returns per unit of risk. Coterra Energy is currently generating about 0.01 per unit of volatility. If you would invest 2,537 in Coterra Energy on January 14, 2025 and sell it today you would lose (15.00) from holding Coterra Energy or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Coterra Energy
Performance |
| Timeline |
| Magnolia Oil Gas |
| Coterra Energy |
Magnolia Oil and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Coterra Energy
The main advantage of trading using opposite Magnolia Oil and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Coterra 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 Coterra Energy will offset losses from the drop in Coterra Energy'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 |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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