Correlation Between Murphy Oil and Range Resources
Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Range 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 Range 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 Range Resources Corp, you can compare the effects of market volatilities on Murphy Oil and Range 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 Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Range Resources.
Diversification Opportunities for Murphy Oil and Range Resources
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Murphy and Range is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Range Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Range Resources Corp 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 Range Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Range Resources Corp has no effect on the direction of Murphy Oil i.e., Murphy Oil and Range Resources go up and down completely randomly.
Pair Corralation between Murphy Oil and Range Resources
Considering the 90-day investment horizon Murphy Oil is expected to under-perform the Range Resources. But the stock apears to be less risky and, when comparing its historical volatility, Murphy Oil is 1.0 times less risky than Range Resources. The stock trades about -0.33 of its potential returns per unit of risk. The Range Resources Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,605 in Range Resources Corp on November 3, 2024 and sell it today you would earn a total of 99.00 from holding Range Resources Corp or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murphy Oil vs. Range Resources Corp
Performance |
| Timeline |
| Murphy Oil |
| Range Resources Corp |
Murphy Oil and Range Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murphy Oil and Range Resources
The main advantage of trading using opposite Murphy Oil and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Range 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 Range Resources will offset losses from the drop in Range Resources' long position.| Murphy Oil vs. Matador Resources | Murphy Oil vs. Civitas Resources | Murphy Oil vs. Magnolia Oil Gas | Murphy Oil vs. SM Energy Co |
| Range Resources vs. Antero Resources Corp | Range Resources vs. EQT Corporation | Range Resources vs. Comstock Resources | Range Resources vs. Permian Resources |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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