Correlation Between Arko Corp and Murphy USA

Can any of the company-specific risk be diversified away by investing in both Arko Corp 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 Arko Corp and Murphy USA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arko Corp and Murphy USA, you can compare the effects of market volatilities on Arko Corp 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 Arko Corp with a short position of Murphy USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arko Corp and Murphy USA.

Diversification Opportunities for Arko Corp and Murphy USA

0.57

Correlation Coefficient

Arko Corp  Murphy USA

Very weak diversification

The 3 months correlation between Arko and Murphy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Arko Corp and Murphy USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy USA and Arko Corp 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 Arko Corp 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 Arko Corp i.e., Arko Corp and Murphy USA go up and down completely randomly.

Pair Corralation between Arko Corp and Murphy USA

Assuming the 90 days horizon Arko Corp is expected to under-perform the Murphy USA. In addition to that, Arko Corp is 3.23 times more volatile than Murphy USA. It trades about -0.12 of its total potential returns per unit of risk. Murphy USA is currently generating about -0.35 per unit of volatility. If you would invest  54,066  in Murphy USA on October 5, 2024 and sell it today you would lose (4,698) from holding Murphy USA or give up 8.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	55.0%
Values	Daily Returns

Arko Corp  vs.  Murphy USA

Arko Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arko Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Murphy USA

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Murphy USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Murphy USA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arko Corp and Murphy USA

The main advantage of trading using opposite Arko Corp and Murphy USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arko Corp 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.

The idea behind Arko Corp and Murphy USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.