Correlation Between Falcon Oil and Murphy Oil
Can any of the company-specific risk be diversified away by investing in both Falcon Oil 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 Falcon Oil and Murphy Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and Murphy Oil, you can compare the effects of market volatilities on Falcon Oil 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 Falcon Oil with a short position of Murphy Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and Murphy Oil.
Diversification Opportunities for Falcon Oil and Murphy Oil
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Falcon and Murphy is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and Murphy Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Oil and Falcon Oil 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 Falcon Oil Gas 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 Falcon Oil i.e., Falcon Oil and Murphy Oil go up and down completely randomly.
Pair Corralation between Falcon Oil and Murphy Oil
Assuming the 90 days horizon Falcon Oil Gas is expected to generate 3.81 times more return on investment than Murphy Oil. However, Falcon Oil is 3.81 times more volatile than Murphy Oil. It trades about 0.28 of its potential returns per unit of risk. Murphy Oil is currently generating about -0.33 per unit of risk. If you would invest 6.00 in Falcon Oil Gas on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Falcon Oil Gas or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Oil Gas vs. Murphy Oil
Performance |
| Timeline |
| Falcon Oil Gas |
| Murphy Oil |
Falcon Oil and Murphy Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and Murphy Oil
The main advantage of trading using opposite Falcon Oil and Murphy Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil 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.| Falcon Oil vs. Gulf Keystone Petroleum | Falcon Oil vs. Maverick Energy Group | Falcon Oil vs. North European Oil | Falcon Oil vs. SandRidge Energy |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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