Correlation Between Matador Resources and EQT
Can any of the company-specific risk be diversified away by investing in both Matador Resources and EQT 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 Matador Resources and EQT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matador Resources and EQT Corporation, you can compare the effects of market volatilities on Matador Resources and EQT 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 Matador Resources with a short position of EQT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matador Resources and EQT.
Diversification Opportunities for Matador Resources and EQT
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matador and EQT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation and Matador Resources 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 Matador Resources are associated (or correlated) with EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of Matador Resources i.e., Matador Resources and EQT go up and down completely randomly.
Pair Corralation between Matador Resources and EQT
Given the investment horizon of 90 days Matador Resources is expected to generate 1.8 times less return on investment than EQT. But when comparing it to its historical volatility, Matador Resources is 1.22 times less risky than EQT. It trades about 0.18 of its potential returns per unit of risk. EQT Corporation is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,680 in EQT Corporation on October 24, 2024 and sell it today you would earn a total of 1,616 from holding EQT Corporation or generate 43.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matador Resources vs. EQT Corp.
Performance |
| Timeline |
| Matador Resources |
| EQT Corporation |
Matador Resources and EQT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matador Resources and EQT
The main advantage of trading using opposite Matador Resources and EQT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matador Resources position performs unexpectedly, EQT 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 EQT will offset losses from the drop in EQT's long position.| Matador Resources vs. Murphy Oil | Matador Resources vs. Civitas Resources | Matador Resources vs. Permian Resources | Matador Resources vs. Antero Resources Corp |
| EQT vs. Antero Resources Corp | EQT vs. Matador Resources | EQT vs. Devon Energy | EQT vs. Diamondback Energy |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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