Correlation Between Empire Petroleum and Murphy Oil
Can any of the company-specific risk be diversified away by investing in both Empire Petroleum and Murphy Oil 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 Empire Petroleum and Murphy Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Petroleum Corp and Murphy Oil, you can compare the effects of market volatilities on Empire Petroleum and Murphy Oil 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 Empire Petroleum with a short position of Murphy Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Petroleum and Murphy Oil.
Diversification Opportunities for Empire Petroleum and Murphy Oil
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Empire and Murphy is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and Murphy Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Oil and Empire Petroleum 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 Empire Petroleum Corp are associated (or correlated) with Murphy Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy Oil has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and Murphy Oil go up and down completely randomly.
Pair Corralation between Empire Petroleum and Murphy Oil
Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to generate 2.31 times more return on investment than Murphy Oil. However, Empire Petroleum is 2.31 times more volatile than Murphy Oil. It trades about 0.13 of its potential returns per unit of risk. Murphy Oil is currently generating about -0.14 per unit of risk. If you would invest 639.00 in Empire Petroleum Corp on September 13, 2024 and sell it today you would earn a total of 68.00 from holding Empire Petroleum Corp or generate 10.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire Petroleum Corp vs. Murphy Oil
Performance |
| Timeline |
| Empire Petroleum Corp |
| Murphy Oil |
Empire Petroleum and Murphy Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Petroleum and Murphy Oil
The main advantage of trading using opposite Empire Petroleum and Murphy Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Petroleum position performs unexpectedly, Murphy Oil 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 Oil will offset losses from the drop in Murphy Oil's long position.| Empire Petroleum vs. PHX Minerals | Empire Petroleum vs. Mexco Energy | Empire Petroleum vs. Granite Ridge Resources | Empire Petroleum vs. XXL Energy Corp |
| Murphy Oil vs. Matador Resources | Murphy Oil vs. Civitas Resources | Murphy Oil vs. Magnolia Oil Gas | Murphy Oil vs. SM Energy Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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