Correlation Between Magnolia Oil and Saturn Oil

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

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

Diversification Opportunities for Magnolia Oil and Saturn Oil

0.42

Correlation Coefficient

Magnolia Oil  Saturn Oil

Very weak diversification

The 3 months correlation between Magnolia and Saturn is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas and Magnolia Oil 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 Magnolia Oil Gas are associated (or correlated) with Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of Magnolia Oil i.e., Magnolia Oil and Saturn Oil go up and down completely randomly.

Pair Corralation between Magnolia Oil and Saturn Oil

Considering the 90-day investment horizon Magnolia Oil Gas is expected to generate 0.79 times more return on investment than Saturn Oil. However, Magnolia Oil Gas is 1.27 times less risky than Saturn Oil. It trades about 0.03 of its potential returns per unit of risk. Saturn Oil Gas is currently generating about 0.0 per unit of risk. If you would invest  2,139  in Magnolia Oil Gas on October 26, 2024 and sell it today you would earn a total of  397.00  from holding Magnolia Oil Gas or generate 18.56% return on investment over 90 days.

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

Magnolia Oil Gas  vs.  Saturn Oil Gas

Magnolia Oil Gas

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Magnolia Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Magnolia Oil is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Saturn Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saturn Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Saturn Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Magnolia Oil and Saturn Oil

The main advantage of trading using opposite Magnolia Oil and Saturn Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil position performs unexpectedly, Saturn 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 Saturn Oil will offset losses from the drop in Saturn Oil's long position.

The idea behind Magnolia Oil Gas and Saturn Oil Gas 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.