Correlation Between Murphy Oil and Evolution Petroleum
Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Evolution Petroleum 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 Evolution Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murphy Oil and Evolution Petroleum, you can compare the effects of market volatilities on Murphy Oil and Evolution Petroleum 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 Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Evolution Petroleum.
Diversification Opportunities for Murphy Oil and Evolution Petroleum
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Murphy and Evolution is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum 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 Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of Murphy Oil i.e., Murphy Oil and Evolution Petroleum go up and down completely randomly.
Pair Corralation between Murphy Oil and Evolution Petroleum
Considering the 90-day investment horizon Murphy Oil is expected to under-perform the Evolution Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Murphy Oil is 1.53 times less risky than Evolution Petroleum. The stock trades about -0.03 of its potential returns per unit of risk. The Evolution Petroleum is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 751.00 in Evolution Petroleum on September 12, 2024 and sell it today you would lose (190.00) from holding Evolution Petroleum or give up 25.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murphy Oil vs. Evolution Petroleum
Performance |
| Timeline |
| Murphy Oil |
| Evolution Petroleum |
Murphy Oil and Evolution Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murphy Oil and Evolution Petroleum
The main advantage of trading using opposite Murphy Oil and Evolution Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Evolution Petroleum 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 Evolution Petroleum will offset losses from the drop in Evolution Petroleum's long position.| Murphy Oil vs. Evolution Petroleum | Murphy Oil vs. Ring Energy | Murphy Oil vs. Gran Tierra Energy | Murphy Oil vs. Permian Resources |
| Evolution Petroleum vs. GeoPark | Evolution Petroleum vs. Granite Ridge Resources | Evolution Petroleum vs. PHX Minerals | Evolution Petroleum vs. California Resources Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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