Correlation Between Murphy Oil and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Coterra Energy 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 Coterra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murphy Oil and Coterra Energy, you can compare the effects of market volatilities on Murphy Oil and Coterra Energy 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 Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Coterra Energy.
Diversification Opportunities for Murphy Oil and Coterra Energy
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Murphy and Coterra is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy 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 Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Murphy Oil i.e., Murphy Oil and Coterra Energy go up and down completely randomly.
Pair Corralation between Murphy Oil and Coterra Energy
Considering the 90-day investment horizon Murphy Oil is expected to under-perform the Coterra Energy. In addition to that, Murphy Oil is 1.24 times more volatile than Coterra Energy. It trades about -0.08 of its total potential returns per unit of risk. Coterra Energy is currently generating about 0.0 per unit of volatility. If you would invest 2,726 in Coterra Energy on August 30, 2024 and sell it today you would lose (58.00) from holding Coterra Energy or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murphy Oil vs. Coterra Energy
Performance |
| Timeline |
| Murphy Oil |
| Coterra Energy |
Murphy Oil and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murphy Oil and Coterra Energy
The main advantage of trading using opposite Murphy Oil and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Coterra Energy 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 Coterra Energy will offset losses from the drop in Coterra Energy's long position.| Murphy Oil vs. Matador Resources | Murphy Oil vs. Civitas Resources | Murphy Oil vs. Magnolia Oil Gas | Murphy Oil vs. SM Energy Co |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. ConocoPhillips | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. Occidental Petroleum |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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