Correlation Between Range Resources and Murphy Oil
Can any of the company-specific risk be diversified away by investing in both Range 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 Range 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 Range Resources Corp and Murphy Oil, you can compare the effects of market volatilities on Range 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 Range Resources with a short position of Murphy Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and Murphy Oil.
Diversification Opportunities for Range Resources and Murphy Oil
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Range and Murphy is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Murphy Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Oil and Range 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 Range Resources Corp 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 Range Resources i.e., Range Resources and Murphy Oil go up and down completely randomly.
Pair Corralation between Range Resources and Murphy Oil
Considering the 90-day investment horizon Range Resources Corp is expected to generate 1.0 times more return on investment than Murphy Oil. However, Range Resources is 1.0 times more volatile than Murphy Oil. It trades about 0.07 of its potential returns per unit of risk. Murphy Oil is currently generating about -0.33 per unit of risk. 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 |
Range Resources Corp vs. Murphy Oil
Performance |
| Timeline |
| Range Resources Corp |
| Murphy Oil |
Range Resources and Murphy Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Range Resources and Murphy Oil
The main advantage of trading using opposite Range Resources and Murphy Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Range 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.| Range Resources vs. Antero Resources Corp | Range Resources vs. EQT Corporation | Range Resources vs. Comstock Resources | Range Resources vs. Permian Resources |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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