Correlation Between Matador Resources and PDC Energy
Can any of the company-specific risk be diversified away by investing in both Matador Resources and PDC 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 Matador Resources and PDC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matador Resources and PDC Energy, you can compare the effects of market volatilities on Matador Resources and PDC 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 Matador Resources with a short position of PDC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matador Resources and PDC Energy.
Diversification Opportunities for Matador Resources and PDC Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Matador and PDC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and PDC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDC Energy 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 PDC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDC Energy has no effect on the direction of Matador Resources i.e., Matador Resources and PDC Energy go up and down completely randomly.
Pair Corralation between Matador Resources and PDC Energy
Given the investment horizon of 90 days Matador Resources is expected to generate 6.03 times less return on investment than PDC Energy. In addition to that, Matador Resources is 1.84 times more volatile than PDC Energy. It trades about 0.03 of its total potential returns per unit of risk. PDC Energy is currently generating about 0.34 per unit of volatility. If you would invest 7,071 in PDC Energy on August 28, 2024 and sell it today you would earn a total of 430.00 from holding PDC Energy or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.24% |
| Values | Daily Returns |
Matador Resources vs. PDC Energy
Performance |
| Timeline |
| Matador Resources |
| PDC Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Matador Resources and PDC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matador Resources and PDC Energy
The main advantage of trading using opposite Matador Resources and PDC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matador Resources position performs unexpectedly, PDC 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 PDC Energy will offset losses from the drop in PDC Energy's long position.| Matador Resources vs. Murphy Oil | Matador Resources vs. Civitas Resources | Matador Resources vs. Permian Resources | Matador Resources vs. Antero Resources Corp |
| PDC Energy vs. Devon Energy | PDC Energy vs. Coterra Energy | PDC Energy vs. Diamondback Energy | PDC Energy vs. EOG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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