Correlation Between Magnolia Oil and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Magnolia Oil and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Dow Jones.
Diversification Opportunities for Magnolia Oil and Dow Jones
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magnolia and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Dow Jones go up and down completely randomly.
Pair Corralation between Magnolia Oil and Dow Jones
Considering the 90-day investment horizon Magnolia Oil Gas is expected to generate 1.99 times more return on investment than Dow Jones. However, Magnolia Oil is 1.99 times more volatile than Dow Jones Industrial. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 2,548 in Magnolia Oil Gas on August 24, 2024 and sell it today you would earn a total of 275.00 from holding Magnolia Oil Gas or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Dow Jones Industrial
Performance |
| Timeline |
Magnolia Oil and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Magnolia Oil Gas
Pair trading matchups for Magnolia Oil
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Magnolia Oil and Dow Jones
The main advantage of trading using opposite Magnolia Oil and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador Resources |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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