Correlation Between Matador Resources and SandRidge Energy
Can any of the company-specific risk be diversified away by investing in both Matador Resources and SandRidge 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 SandRidge 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 SandRidge Energy, you can compare the effects of market volatilities on Matador Resources and SandRidge 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 SandRidge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matador Resources and SandRidge Energy.
Diversification Opportunities for Matador Resources and SandRidge Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matador and SandRidge is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and SandRidge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SandRidge 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 SandRidge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SandRidge Energy has no effect on the direction of Matador Resources i.e., Matador Resources and SandRidge Energy go up and down completely randomly.
Pair Corralation between Matador Resources and SandRidge Energy
Given the investment horizon of 90 days Matador Resources is expected to under-perform the SandRidge Energy. In addition to that, Matador Resources is 1.2 times more volatile than SandRidge Energy. It trades about -0.06 of its total potential returns per unit of risk. SandRidge Energy is currently generating about -0.03 per unit of volatility. If you would invest 1,194 in SandRidge Energy on November 4, 2024 and sell it today you would lose (9.00) from holding SandRidge Energy or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matador Resources vs. SandRidge Energy
Performance |
| Timeline |
| Matador Resources |
| SandRidge Energy |
Matador Resources and SandRidge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matador Resources and SandRidge Energy
The main advantage of trading using opposite Matador Resources and SandRidge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matador Resources position performs unexpectedly, SandRidge 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 SandRidge Energy will offset losses from the drop in SandRidge 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 |
| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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