Correlation Between 1 800 and Murphy USA
Can any of the company-specific risk be diversified away by investing in both 1 800 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 1 800 and Murphy USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1 800 FLOWERSCOM and Murphy USA, you can compare the effects of market volatilities on 1 800 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 1 800 with a short position of Murphy USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1 800 and Murphy USA.
Diversification Opportunities for 1 800 and Murphy USA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between FLWS and Murphy is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding 1 800 FLOWERSCOM and Murphy USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy USA and 1 800 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 1 800 FLOWERSCOM 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 1 800 i.e., 1 800 and Murphy USA go up and down completely randomly.
Pair Corralation between 1 800 and Murphy USA
Given the investment horizon of 90 days 1 800 is expected to generate 4.17 times less return on investment than Murphy USA. In addition to that, 1 800 is 2.03 times more volatile than Murphy USA. It trades about 0.05 of its total potential returns per unit of risk. Murphy USA is currently generating about 0.43 per unit of volatility. If you would invest 48,207 in Murphy USA on August 28, 2024 and sell it today you would earn a total of 6,923 from holding Murphy USA or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1 800 FLOWERSCOM vs. Murphy USA
Performance |
| Timeline |
| 1 800 FLOWERSCOM |
| Murphy USA |
1 800 and Murphy USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1 800 and Murphy USA
The main advantage of trading using opposite 1 800 and Murphy USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1 800 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 1 800 FLOWERSCOM 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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