Correlation Between Matador Resources and Gulfport Energy

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

Diversification Opportunities for Matador Resources and Gulfport Energy

0.63

Correlation Coefficient

Matador Resources  Gulfport Energy

Poor diversification

The 3 months correlation between Matador and Gulfport is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and Gulfport Energy Operating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulfport Energy Operating 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 Gulfport Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulfport Energy Operating has no effect on the direction of Matador Resources i.e., Matador Resources and Gulfport Energy go up and down completely randomly.

Pair Corralation between Matador Resources and Gulfport Energy

Given the investment horizon of 90 days Matador Resources is expected to under-perform the Gulfport Energy. But the stock apears to be less risky and, when comparing its historical volatility, Matador Resources is 1.07 times less risky than Gulfport Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Gulfport Energy Operating is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  17,580  in Gulfport Energy Operating on November 28, 2024 and sell it today you would earn a total of  219.00  from holding Gulfport Energy Operating or generate 1.25% return on investment over 90 days.

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

Matador Resources  vs.  Gulfport Energy Operating

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 weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Gulfport Energy Operating

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gulfport Energy Operating are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Gulfport Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Matador Resources and Gulfport Energy

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

The idea behind Matador Resources and Gulfport Energy Operating 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.