Correlation Between Murphy Oil and Obsidian Energy
Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Obsidian 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 Obsidian 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 Obsidian Energy, you can compare the effects of market volatilities on Murphy Oil and Obsidian 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 Obsidian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Obsidian Energy.
Diversification Opportunities for Murphy Oil and Obsidian Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Murphy and Obsidian is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Obsidian Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obsidian 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 Obsidian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obsidian Energy has no effect on the direction of Murphy Oil i.e., Murphy Oil and Obsidian Energy go up and down completely randomly.
Pair Corralation between Murphy Oil and Obsidian Energy
Considering the 90-day investment horizon Murphy Oil is expected to generate 0.62 times more return on investment than Obsidian Energy. However, Murphy Oil is 1.61 times less risky than Obsidian Energy. It trades about 0.13 of its potential returns per unit of risk. Obsidian Energy is currently generating about 0.05 per unit of risk. If you would invest 3,094 in Murphy Oil on August 30, 2024 and sell it today you would earn a total of 159.00 from holding Murphy Oil or generate 5.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Murphy Oil vs. Obsidian Energy
Performance |
Timeline |
Murphy Oil |
Obsidian Energy |
Murphy Oil and Obsidian Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Murphy Oil and Obsidian Energy
The main advantage of trading using opposite Murphy Oil and Obsidian Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Obsidian 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 Obsidian Energy will offset losses from the drop in Obsidian 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 |
Obsidian Energy vs. Devon Energy | Obsidian Energy vs. ConocoPhillips | Obsidian Energy vs. Diamondback Energy | Obsidian 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Positions Ratings 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 | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |