Correlation Between Growth Fund and Murphy USA
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Murphy USA 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 Growth Fund and Murphy USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Murphy USA, you can compare the effects of market volatilities on Growth Fund and Murphy USA 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 Growth Fund with a short position of Murphy USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Murphy USA.
Diversification Opportunities for Growth Fund and Murphy USA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Growth and Murphy is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Murphy USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy USA and Growth Fund 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 Growth Fund Of are associated (or correlated) with Murphy USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy USA has no effect on the direction of Growth Fund i.e., Growth Fund and Murphy USA go up and down completely randomly.
Pair Corralation between Growth Fund and Murphy USA
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.82 times more return on investment than Murphy USA. However, Growth Fund Of is 1.22 times less risky than Murphy USA. It trades about 0.24 of its potential returns per unit of risk. Murphy USA is currently generating about 0.08 per unit of risk. If you would invest 7,457 in Growth Fund Of on November 3, 2024 and sell it today you would earn a total of 374.00 from holding Growth Fund Of or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Murphy USA
Performance |
| Timeline |
| Growth Fund |
| Murphy USA |
Growth Fund and Murphy USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Murphy USA
The main advantage of trading using opposite Growth Fund and Murphy USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Murphy USA 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 Murphy USA will offset losses from the drop in Murphy USA's long position.| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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