Correlation Between Magnolia Oil and Granite Ridge
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Granite Ridge 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 Granite Ridge 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 Granite Ridge Resources, you can compare the effects of market volatilities on Magnolia Oil and Granite Ridge 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 Granite Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Granite Ridge.
Diversification Opportunities for Magnolia Oil and Granite Ridge
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magnolia and Granite is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Granite Ridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Ridge Resources 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 Granite Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Ridge Resources has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Granite Ridge go up and down completely randomly.
Pair Corralation between Magnolia Oil and Granite Ridge
Considering the 90-day investment horizon Magnolia Oil is expected to generate 1.29 times less return on investment than Granite Ridge. But when comparing it to its historical volatility, Magnolia Oil Gas is 1.55 times less risky than Granite Ridge. It trades about 0.02 of its potential returns per unit of risk. Granite Ridge Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 574.00 in Granite Ridge Resources on November 9, 2024 and sell it today you would earn a total of 39.00 from holding Granite Ridge Resources or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Granite Ridge Resources
Performance |
| Timeline |
| Magnolia Oil Gas |
| Granite Ridge Resources |
Magnolia Oil and Granite Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Granite Ridge
The main advantage of trading using opposite Magnolia Oil and Granite Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Granite Ridge 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 Granite Ridge will offset losses from the drop in Granite Ridge'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 |
| Granite Ridge vs. Epsilon Energy | Granite Ridge vs. Gulfport Energy Operating | Granite Ridge vs. North European Oil | Granite Ridge vs. PHX Minerals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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