Correlation Between Magnolia Oil and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil and Valeura Energy 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 Valeura Energy 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 Valeura Energy, you can compare the effects of market volatilities on Magnolia Oil and Valeura Energy 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 Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Valeura Energy.
Diversification Opportunities for Magnolia Oil and Valeura Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnolia and Valeura is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Valeura Energy go up and down completely randomly.
Pair Corralation between Magnolia Oil and Valeura Energy
Considering the 90-day investment horizon Magnolia Oil is expected to generate 14.9 times less return on investment than Valeura Energy. But when comparing it to its historical volatility, Magnolia Oil Gas is 2.33 times less risky than Valeura Energy. It trades about 0.05 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 463.00 in Valeura Energy on October 15, 2024 and sell it today you would earn a total of 90.00 from holding Valeura Energy or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Valeura Energy
Performance |
| Timeline |
| Magnolia Oil Gas |
| Valeura Energy |
Magnolia Oil and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Valeura Energy
The main advantage of trading using opposite Magnolia Oil and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Valeura Energy 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 Valeura Energy will offset losses from the drop in Valeura Energy'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 |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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