Correlation Between Vista Oil and Mach Natural

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

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

Diversification Opportunities for Vista Oil and Mach Natural

-0.48

Correlation Coefficient

Vista Oil  Mach Natural

Very good diversification

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

Pair Corralation between Vista Oil and Mach Natural

Given the investment horizon of 90 days Vista Oil is expected to generate 1.65 times less return on investment than Mach Natural. But when comparing it to its historical volatility, Vista Oil Gas is 1.69 times less risky than Mach Natural. It trades about 0.11 of its potential returns per unit of risk. Mach Natural Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,595  in Mach Natural Resources on September 14, 2024 and sell it today you would earn a total of  503.00  from holding Mach Natural Resources or generate 31.54% return on investment over 90 days.

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

Vista Oil Gas  vs.  Mach Natural Resources

Vista Oil Gas

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vista Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mach Natural Resources

Risk-Adjusted Performance

8 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mach Natural Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Mach Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vista Oil and Mach Natural

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

The idea behind Vista Oil Gas and Mach Natural Resources 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.