Correlation Between Matador Resources and CNX Resources

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

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

Diversification Opportunities for Matador Resources and CNX Resources

0.52

Correlation Coefficient

Matador Resources  CNX Resources

Very weak diversification

The 3 months correlation between Matador and CNX is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Matador Resources and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources 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 CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Matador Resources i.e., Matador Resources and CNX Resources go up and down completely randomly.

Pair Corralation between Matador Resources and CNX Resources

Given the investment horizon of 90 days Matador Resources is expected to generate 1.17 times more return on investment than CNX Resources. However, Matador Resources is 1.17 times more volatile than CNX Resources Corp. It trades about 0.13 of its potential returns per unit of risk. CNX Resources Corp is currently generating about -0.05 per unit of risk. If you would invest  4,003  in Matador Resources on May 6, 2025 and sell it today you would earn a total of  763.00  from holding Matador Resources or generate 19.06% return on investment over 90 days.

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

Matador Resources  vs.  CNX Resources Corp

Matador Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matador Resources are ranked lower than 10 (%) 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.

CNX Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNX Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Matador Resources and CNX Resources

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

The idea behind Matador Resources and CNX Resources 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.

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.