Correlation Between Magnolia Oil and North European
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and North European 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 North European 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 North European Oil, you can compare the effects of market volatilities on Magnolia Oil and North European 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 North European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and North European.
Diversification Opportunities for Magnolia Oil and North European
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magnolia and North is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and North European Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North European Oil 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 North European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North European Oil has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and North European go up and down completely randomly.
Pair Corralation between Magnolia Oil and North European
Considering the 90-day investment horizon Magnolia Oil Gas is expected to generate 0.63 times more return on investment than North European. However, Magnolia Oil Gas is 1.59 times less risky than North European. It trades about 0.12 of its potential returns per unit of risk. North European Oil is currently generating about -0.12 per unit of risk. If you would invest 2,419 in Magnolia Oil Gas on August 31, 2024 and sell it today you would earn a total of 349.00 from holding Magnolia Oil Gas or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnolia Oil Gas vs. North European Oil
Performance |
| Timeline |
| Magnolia Oil Gas |
| North European Oil |
Magnolia Oil and North European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and North European
The main advantage of trading using opposite Magnolia Oil and North European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, North European 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 North European will offset losses from the drop in North European'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 |
| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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