Correlation Between Magnolia Oil and Liberty Oilfield
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Liberty Oilfield 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 Liberty Oilfield 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 Liberty Oilfield Services, you can compare the effects of market volatilities on Magnolia Oil and Liberty Oilfield 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 Liberty Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Liberty Oilfield.
Diversification Opportunities for Magnolia Oil and Liberty Oilfield
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magnolia and Liberty is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Liberty Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Oilfield Services 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 Liberty Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Oilfield Services has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Liberty Oilfield go up and down completely randomly.
Pair Corralation between Magnolia Oil and Liberty Oilfield
Considering the 90-day investment horizon Magnolia Oil Gas is expected to generate 0.63 times more return on investment than Liberty Oilfield. However, Magnolia Oil Gas is 1.6 times less risky than Liberty Oilfield. It trades about 0.22 of its potential returns per unit of risk. Liberty Oilfield Services is currently generating about 0.08 per unit of risk. If you would invest 2,545 in Magnolia Oil Gas on August 28, 2024 and sell it today you would earn a total of 250.00 from holding Magnolia Oil Gas or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Liberty Oilfield Services
Performance |
| Timeline |
| Magnolia Oil Gas |
| Liberty Oilfield Services |
Magnolia Oil and Liberty Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Liberty Oilfield
The main advantage of trading using opposite Magnolia Oil and Liberty Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Liberty Oilfield 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 Liberty Oilfield will offset losses from the drop in Liberty Oilfield'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 |
| Liberty Oilfield vs. Ranger Energy Services | Liberty Oilfield vs. ProFrac Holding Corp | Liberty Oilfield vs. Archrock | Liberty Oilfield vs. Newpark Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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