Correlation Between Baozun and Murphy USA
Can any of the company-specific risk be diversified away by investing in both Baozun 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 Baozun and Murphy USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baozun Inc and Murphy USA, you can compare the effects of market volatilities on Baozun 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 Baozun with a short position of Murphy USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baozun and Murphy USA.
Diversification Opportunities for Baozun and Murphy USA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baozun and Murphy is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Baozun Inc and Murphy USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy USA and Baozun 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 Baozun Inc 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 Baozun i.e., Baozun and Murphy USA go up and down completely randomly.
Pair Corralation between Baozun and Murphy USA
Given the investment horizon of 90 days Baozun Inc is expected to generate 3.55 times more return on investment than Murphy USA. However, Baozun is 3.55 times more volatile than Murphy USA. It trades about -0.06 of its potential returns per unit of risk. Murphy USA is currently generating about -0.24 per unit of risk. If you would invest 306.00 in Baozun Inc on October 24, 2024 and sell it today you would lose (17.00) from holding Baozun Inc or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baozun Inc vs. Murphy USA
Performance |
| Timeline |
| Baozun Inc |
| Murphy USA |
Baozun and Murphy USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baozun and Murphy USA
The main advantage of trading using opposite Baozun and Murphy USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun 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.The idea behind Baozun Inc and Murphy USA 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.| Murphy USA vs. Group 1 Automotive | Murphy USA vs. Murphy Oil | Murphy USA vs. LCI Industries | Murphy USA vs. Penske Automotive Group |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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