Correlation Between Matador Resources and CPG Old

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Can any of the company-specific risk be diversified away by investing in both Matador Resources and CPG Old 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 CPG Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matador Resources and CPG Old, you can compare the effects of market volatilities on Matador Resources and CPG Old 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 CPG Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matador Resources and CPG Old.

Diversification Opportunities for Matador Resources and CPG Old

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Matador and CPG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and CPG Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPG Old 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 CPG Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPG Old has no effect on the direction of Matador Resources i.e., Matador Resources and CPG Old go up and down completely randomly.

Pair Corralation between Matador Resources and CPG Old

If you would invest  5,739  in Matador Resources on October 12, 2024 and sell it today you would earn a total of  269.00  from holding Matador Resources or generate 4.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy5.0%
ValuesDaily Returns

Matador Resources  vs.  CPG Old

 Performance 
       Timeline  
Matador Resources 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Matador Resources are ranked lower than 7 (%) 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.
CPG Old 

Risk-Adjusted Performance

0 of 100

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

Matador Resources and CPG Old Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Matador Resources and CPG Old

The main advantage of trading using opposite Matador Resources and CPG Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matador Resources position performs unexpectedly, CPG Old 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 CPG Old will offset losses from the drop in CPG Old's long position.
The idea behind Matador Resources and CPG Old 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.
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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