Correlation Between Permian Resources and Murphy Oil
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Murphy Oil 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 Permian Resources and Murphy Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Murphy Oil, you can compare the effects of market volatilities on Permian Resources and Murphy Oil 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 Permian Resources with a short position of Murphy Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Murphy Oil.
Diversification Opportunities for Permian Resources and Murphy Oil
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Permian and Murphy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Murphy Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Oil and Permian Resources 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 Permian Resources are associated (or correlated) with Murphy Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy Oil has no effect on the direction of Permian Resources i.e., Permian Resources and Murphy Oil go up and down completely randomly.
Pair Corralation between Permian Resources and Murphy Oil
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 0.7 times more return on investment than Murphy Oil. However, Permian Resources is 1.43 times less risky than Murphy Oil. It trades about -0.15 of its potential returns per unit of risk. Murphy Oil is currently generating about -0.51 per unit of risk. If you would invest 1,499 in Permian Resources on November 9, 2024 and sell it today you would lose (69.00) from holding Permian Resources or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Permian Resources vs. Murphy Oil
Performance |
| Timeline |
| Permian Resources |
| Murphy Oil |
Permian Resources and Murphy Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and Murphy Oil
The main advantage of trading using opposite Permian Resources and Murphy Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Murphy Oil 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 Oil will offset losses from the drop in Murphy Oil's long position.| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
| Murphy Oil vs. Matador Resources | Murphy Oil vs. Civitas Resources | Murphy Oil vs. Magnolia Oil Gas | Murphy Oil vs. SM Energy Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |