Correlation Between CNX Resources and Matador Resources

Can any of the company-specific risk be diversified away by investing in both CNX Resources 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 CNX Resources and Matador Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CNX Resources Corp and Matador Resources, you can compare the effects of market volatilities on CNX Resources 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 CNX Resources with a short position of Matador Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNX Resources and Matador Resources.

Diversification Opportunities for CNX Resources and Matador Resources

-0.09

Correlation Coefficient

CNX Resources  Matador Resources

Good diversification

The 3 months correlation between CNX and Matador is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CNX Resources Corp and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources and CNX 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 CNX Resources 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 CNX Resources i.e., CNX Resources and Matador Resources go up and down completely randomly.

Pair Corralation between CNX Resources and Matador Resources

Considering the 90-day investment horizon CNX Resources Corp is expected to under-perform the Matador Resources. In addition to that, CNX Resources is 1.09 times more volatile than Matador Resources. It trades about -0.07 of its total potential returns per unit of risk. Matador Resources is currently generating about 0.0 per unit of volatility. If you would invest  5,384  in Matador Resources on December 24, 2024 and sell it today you would lose (87.00) from holding Matador Resources or give up 1.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CNX Resources Corp  vs.  Matador Resources

CNX Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNX Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Matador Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matador Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Matador Resources is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CNX Resources and Matador Resources

The main advantage of trading using opposite CNX Resources and Matador Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNX Resources 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.

The idea behind CNX Resources Corp and Matador Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.