Correlation Between XXL Energy and Matador Resources
Can any of the company-specific risk be diversified away by investing in both XXL Energy and Matador Resources 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 XXL Energy and Matador Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL Energy Corp and Matador Resources, you can compare the effects of market volatilities on XXL Energy and Matador Resources 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 XXL Energy with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL Energy and Matador Resources.
Diversification Opportunities for XXL Energy and Matador Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XXL and Matador is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding XXL Energy Corp and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources and XXL 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 XXL Energy Corp are associated (or correlated) with Matador Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Resources has no effect on the direction of XXL Energy i.e., XXL Energy and Matador Resources go up and down completely randomly.
Pair Corralation between XXL Energy and Matador Resources
Assuming the 90 days horizon XXL Energy Corp is expected to under-perform the Matador Resources. In addition to that, XXL Energy is 3.91 times more volatile than Matador Resources. It trades about -0.09 of its total potential returns per unit of risk. Matador Resources is currently generating about 0.02 per unit of volatility. If you would invest 5,735 in Matador Resources on September 3, 2024 and sell it today you would earn a total of 154.00 from holding Matador Resources or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
XXL Energy Corp vs. Matador Resources
Performance |
| Timeline |
| XXL Energy Corp |
| Matador Resources |
XXL Energy and Matador Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL Energy and Matador Resources
The main advantage of trading using opposite XXL Energy and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL Energy position performs unexpectedly, Matador Resources 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 Matador Resources will offset losses from the drop in Matador Resources' long position.| XXL Energy vs. PHX Minerals | XXL Energy vs. Mexco Energy | XXL Energy vs. Granite Ridge Resources | XXL Energy vs. PrimeEnergy |
| Matador Resources vs. Granite Ridge Resources | Matador Resources vs. North European Oil | Matador Resources vs. CNX Resources Corp | Matador Resources vs. GeoPark |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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