Correlation Between Murphy Oil and Battalion Oil
Can any of the company-specific risk be diversified away by investing in both Murphy Oil and Battalion 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 Murphy Oil and Battalion Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murphy Oil and Battalion Oil Corp, you can compare the effects of market volatilities on Murphy Oil and Battalion 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 Murphy Oil with a short position of Battalion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and Battalion Oil.
Diversification Opportunities for Murphy Oil and Battalion Oil
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Murphy and Battalion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and Murphy Oil 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 Murphy Oil are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Murphy Oil i.e., Murphy Oil and Battalion Oil go up and down completely randomly.
Pair Corralation between Murphy Oil and Battalion Oil
Considering the 90-day investment horizon Murphy Oil is expected to generate 0.4 times more return on investment than Battalion Oil. However, Murphy Oil is 2.48 times less risky than Battalion Oil. It trades about 0.0 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about -0.07 per unit of risk. If you would invest 2,834 in Murphy Oil on December 26, 2024 and sell it today you would lose (60.00) from holding Murphy Oil or give up 2.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Murphy Oil vs. Battalion Oil Corp
Performance |
Timeline |
Murphy Oil |
Battalion Oil Corp |
Murphy Oil and Battalion Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Murphy Oil and Battalion Oil
The main advantage of trading using opposite Murphy Oil and Battalion Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, Battalion 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 Battalion Oil will offset losses from the drop in Battalion Oil's long position.Murphy Oil vs. Matador Resources | Murphy Oil vs. Civitas Resources | Murphy Oil vs. Magnolia Oil Gas | Murphy Oil vs. SM Energy Co |
Battalion Oil vs. Epsilon Energy | Battalion Oil vs. Citizens Community Bancorp | Battalion Oil vs. Perma Pipe International Holdings | Battalion Oil vs. Amplify Energy Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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