Correlation Between CPG Old and Murphy Oil

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

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

Diversification Opportunities for CPG Old and Murphy Oil

0.52

Correlation Coefficient

CPG Old  Murphy Oil

Very weak diversification

The 3 months correlation between CPG and Murphy is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CPG Old and Murphy Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy Oil and CPG Old 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 CPG Old 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 CPG Old i.e., CPG Old and Murphy Oil go up and down completely randomly.

Pair Corralation between CPG Old and Murphy Oil

If you would invest  799.00  in CPG Old on October 12, 2024 and sell it today you would earn a total of  0.00  from holding CPG Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.64%
Values	Daily Returns

CPG Old  vs.  Murphy Oil

CPG Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPG Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CPG Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Murphy Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Murphy Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Murphy Oil is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CPG Old and Murphy Oil

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

The idea behind CPG Old and Murphy Oil 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.