Correlation Between VOC Energy and Magnolia Oil
Can any of the company-specific risk be diversified away by investing in both VOC Energy and Magnolia Oil 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 VOC Energy and Magnolia Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VOC Energy Trust and Magnolia Oil Gas, you can compare the effects of market volatilities on VOC Energy and Magnolia Oil 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 VOC Energy with a short position of Magnolia Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of VOC Energy and Magnolia Oil.
Diversification Opportunities for VOC Energy and Magnolia Oil
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VOC and Magnolia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding VOC Energy Trust and Magnolia Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnolia Oil Gas and VOC Energy 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 VOC Energy Trust are associated (or correlated) with Magnolia Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnolia Oil Gas has no effect on the direction of VOC Energy i.e., VOC Energy and Magnolia Oil go up and down completely randomly.
Pair Corralation between VOC Energy and Magnolia Oil
Considering the 90-day investment horizon VOC Energy is expected to generate 1.93 times less return on investment than Magnolia Oil. In addition to that, VOC Energy is 1.01 times more volatile than Magnolia Oil Gas. It trades about 0.06 of its total potential returns per unit of risk. Magnolia Oil Gas is currently generating about 0.12 per unit of volatility. 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VOC Energy Trust vs. Magnolia Oil Gas
Performance |
| Timeline |
| VOC Energy Trust |
| Magnolia Oil Gas |
VOC Energy and Magnolia Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VOC Energy and Magnolia Oil
The main advantage of trading using opposite VOC Energy and Magnolia Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOC Energy position performs unexpectedly, Magnolia Oil 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 Magnolia Oil will offset losses from the drop in Magnolia Oil's long position.| VOC Energy vs. Cross Timbers Royalty | VOC Energy vs. North European Oil | VOC Energy vs. Sabine Royalty Trust | VOC Energy vs. Permianville Royalty Trust |
| Magnolia Oil vs. SM Energy Co | Magnolia Oil vs. Civitas Resources | Magnolia Oil vs. Range Resources Corp | Magnolia Oil vs. Matador 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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