Correlation Between PDD Holdings and Murphy USA
Can any of the company-specific risk be diversified away by investing in both PDD Holdings and Murphy USA 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 PDD Holdings and Murphy USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Murphy USA, you can compare the effects of market volatilities on PDD Holdings and Murphy USA 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 PDD Holdings with a short position of Murphy USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Murphy USA.
Diversification Opportunities for PDD Holdings and Murphy USA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PDD and Murphy is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Murphy USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy USA and PDD Holdings 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 PDD Holdings are associated (or correlated) with Murphy USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy USA has no effect on the direction of PDD Holdings i.e., PDD Holdings and Murphy USA go up and down completely randomly.
Pair Corralation between PDD Holdings and Murphy USA
Considering the 90-day investment horizon PDD Holdings is expected to under-perform the Murphy USA. In addition to that, PDD Holdings is 2.11 times more volatile than Murphy USA. It trades about -0.31 of its total potential returns per unit of risk. Murphy USA is currently generating about 0.42 per unit of volatility. If you would invest 48,207 in Murphy USA on August 28, 2024 and sell it today you would earn a total of 6,923 from holding Murphy USA or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PDD Holdings vs. Murphy USA
Performance |
| Timeline |
| PDD Holdings |
| Murphy USA |
PDD Holdings and Murphy USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Murphy USA
The main advantage of trading using opposite PDD Holdings and Murphy USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings position performs unexpectedly, Murphy USA 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 Murphy USA will offset losses from the drop in Murphy USA's long position.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
| Murphy USA vs. Group 1 Automotive | Murphy USA vs. Murphy Oil | Murphy USA vs. LCI Industries | Murphy USA vs. Penske Automotive Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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