Correlation Between Murphy USA and Xcel Brands
Can any of the company-specific risk be diversified away by investing in both Murphy USA and Xcel Brands 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 USA and Xcel Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murphy USA and Xcel Brands, you can compare the effects of market volatilities on Murphy USA and Xcel Brands 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 USA with a short position of Xcel Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy USA and Xcel Brands.
Diversification Opportunities for Murphy USA and Xcel Brands
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Murphy and Xcel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Murphy USA and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands and Murphy USA 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 USA are associated (or correlated) with Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of Murphy USA i.e., Murphy USA and Xcel Brands go up and down completely randomly.
Pair Corralation between Murphy USA and Xcel Brands
Given the investment horizon of 90 days Murphy USA is expected to generate 0.32 times more return on investment than Xcel Brands. However, Murphy USA is 3.09 times less risky than Xcel Brands. It trades about 0.12 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.04 per unit of risk. If you would invest 31,101 in Murphy USA on September 12, 2024 and sell it today you would earn a total of 23,752 from holding Murphy USA or generate 76.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murphy USA vs. Xcel Brands
Performance |
| Timeline |
| Murphy USA |
| Xcel Brands |
Murphy USA and Xcel Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murphy USA and Xcel Brands
The main advantage of trading using opposite Murphy USA and Xcel Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy USA position performs unexpectedly, Xcel Brands 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 Xcel Brands will offset losses from the drop in Xcel Brands' long position.| Murphy USA vs. Group 1 Automotive | Murphy USA vs. Murphy Oil | Murphy USA vs. LCI Industries | Murphy USA vs. Penske Automotive Group |
| Xcel Brands vs. Under Armour C | Xcel Brands vs. Oxford Industries | Xcel Brands vs. Vince Holding Corp | Xcel Brands vs. Ermenegildo Zegna NV |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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