Correlation Between Matador Resources and Quad Energy

Can any of the company-specific risk be diversified away by investing in both Matador Resources and Quad 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 Quad 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 Quad Energy Corp, you can compare the effects of market volatilities on Matador Resources and Quad 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 Quad Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matador Resources and Quad Energy.

Diversification Opportunities for Matador Resources and Quad Energy

0.0

Correlation Coefficient

Matador Resources  Quad Energy

Pay attention - limited upside

The 3 months correlation between Matador and Quad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and Quad Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quad Energy Corp 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 Quad Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quad Energy Corp has no effect on the direction of Matador Resources i.e., Matador Resources and Quad Energy go up and down completely randomly.

Pair Corralation between Matador Resources and Quad Energy

If you would invest  2.00  in Quad Energy Corp on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Quad Energy Corp or generate 0.0% return on investment over 90 days.

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

Matador Resources  vs.  Quad Energy Corp

Matador Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matador Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Matador Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Quad Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quad Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Quad Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Matador Resources and Quad Energy

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

The idea behind Matador Resources and Quad Energy Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.