Correlation Between Murphy Oil and Comstock Resources

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Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Comstock Resources 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 Murphy Oil and Comstock Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murphy Oil and Comstock Resources, you can compare the effects of market volatilities on Murphy Oil and Comstock Resources 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 Murphy Oil with a short position of Comstock Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Comstock Resources.

Diversification Opportunities for Murphy Oil and Comstock Resources

MurphyComstockDiversified AwayMurphyComstockDiversified Away100%
-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Murphy and Comstock is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Comstock Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Resources and Murphy 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 Murphy Oil are associated (or correlated) with Comstock Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Resources has no effect on the direction of Murphy Oil i.e., Murphy Oil and Comstock Resources go up and down completely randomly.

Pair Corralation between Murphy Oil and Comstock Resources

Considering the 90-day investment horizon Murphy Oil is expected to under-perform the Comstock Resources. But the stock apears to be less risky and, when comparing its historical volatility, Murphy Oil is 1.57 times less risky than Comstock Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Comstock Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,176  in Comstock Resources on November 26, 2024 and sell it today you would earn a total of  734.00  from holding Comstock Resources or generate 62.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Murphy Oil  vs.  Comstock Resources

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -200204060
JavaScript chart by amCharts 3.21.15MUR CRK
       Timeline  
Murphy Oil 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Murphy Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb25262728293031323334
Comstock Resources 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Comstock Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb141516171819202122

Murphy Oil and Comstock Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.53-2.65-1.76-0.870.00.771.562.353.14 0.030.040.050.060.070.080.09
JavaScript chart by amCharts 3.21.15MUR CRK
       Returns  

Pair Trading with Murphy Oil and Comstock Resources

The main advantage of trading using opposite Murphy Oil and Comstock Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Comstock Resources 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 Comstock Resources will offset losses from the drop in Comstock Resources' long position.
The idea behind Murphy Oil and Comstock Resources 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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