Correlation Between Matador Resources and SEB SA

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

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

Diversification Opportunities for Matador Resources and SEB SA

-0.48

Correlation Coefficient

Matador Resources  SEB SA

Very good diversification

The 3 months correlation between Matador and SEB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Matador Resources i.e., Matador Resources and SEB SA go up and down completely randomly.

Pair Corralation between Matador Resources and SEB SA

Given the investment horizon of 90 days Matador Resources is expected to under-perform the SEB SA. In addition to that, Matador Resources is 1.49 times more volatile than SEB SA. It trades about -0.03 of its total potential returns per unit of risk. SEB SA is currently generating about 0.11 per unit of volatility. If you would invest  8,620  in SEB SA on December 28, 2024 and sell it today you would earn a total of  618.00  from holding SEB SA or generate 7.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.67%
Values	Daily Returns

Matador Resources  vs.  SEB SA

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.

SEB SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEB SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SEB SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Matador Resources and SEB SA

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

The idea behind Matador Resources and SEB SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.