Correlation Between Murphy Oil and Vital Energy
Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Vital 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 Vital 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 Vital Energy, you can compare the effects of market volatilities on Murphy Oil and Vital 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 Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Vital Energy.
Diversification Opportunities for Murphy Oil and Vital Energy
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Murphy and Vital is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital 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 Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of Murphy Oil i.e., Murphy Oil and Vital Energy go up and down completely randomly.
Pair Corralation between Murphy Oil and Vital Energy
Considering the 90-day investment horizon Murphy Oil is expected to under-perform the Vital Energy. In addition to that, Murphy Oil is 1.07 times more volatile than Vital Energy. It trades about -0.33 of its total potential returns per unit of risk. Vital Energy is currently generating about 0.02 per unit of volatility. If you would invest 3,176 in Vital Energy on November 3, 2024 and sell it today you would earn a total of 14.00 from holding Vital Energy or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murphy Oil vs. Vital Energy
Performance |
| Timeline |
| Murphy Oil |
| Vital Energy |
Murphy Oil and Vital Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murphy Oil and Vital Energy
The main advantage of trading using opposite Murphy Oil and Vital Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Vital 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 Vital Energy will offset losses from the drop in Vital 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 |
| Vital Energy vs. SM Energy Co | Vital Energy vs. Permian Resources | Vital Energy vs. Matador Resources | Vital Energy vs. Obsidian Energy |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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