Correlation Between Magnolia Oil and Dorchester Minerals
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Dorchester Minerals 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 Dorchester Minerals 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 Dorchester Minerals LP, you can compare the effects of market volatilities on Magnolia Oil and Dorchester Minerals 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 Dorchester Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Dorchester Minerals.
Diversification Opportunities for Magnolia Oil and Dorchester Minerals
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magnolia and Dorchester is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Dorchester Minerals LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorchester Minerals 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 Dorchester Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorchester Minerals has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Dorchester Minerals go up and down completely randomly.
Pair Corralation between Magnolia Oil and Dorchester Minerals
Considering the 90-day investment horizon Magnolia Oil is expected to generate 1.37 times less return on investment than Dorchester Minerals. In addition to that, Magnolia Oil is 1.28 times more volatile than Dorchester Minerals LP. It trades about 0.04 of its total potential returns per unit of risk. Dorchester Minerals LP is currently generating about 0.06 per unit of volatility. If you would invest 2,207 in Dorchester Minerals LP on August 30, 2024 and sell it today you would earn a total of 1,212 from holding Dorchester Minerals LP or generate 54.92% 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. Dorchester Minerals LP
Performance |
| Timeline |
| Magnolia Oil Gas |
| Dorchester Minerals |
Magnolia Oil and Dorchester Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Dorchester Minerals
The main advantage of trading using opposite Magnolia Oil and Dorchester Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Dorchester Minerals 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 Dorchester Minerals will offset losses from the drop in Dorchester Minerals' long position.| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador Resources |
| Dorchester Minerals vs. Devon Energy | Dorchester Minerals vs. ConocoPhillips | Dorchester Minerals vs. Diamondback Energy | Dorchester Minerals vs. Occidental Petroleum |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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