Correlation Between Murphy Oil and VOC Energy

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

By analyzing existing cross correlation between Murphy Oil and VOC Energy Trust, you can compare the effects of market volatilities on Murphy Oil and VOC Energy 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 VOC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy Oil and VOC Energy.

Diversification Opportunities for Murphy Oil and VOC Energy

0.82

Correlation Coefficient

Murphy Oil  VOC Energy

Very poor diversification

The 3 months correlation between Murphy and VOC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and VOC Energy Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOC Energy Trust 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 VOC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOC Energy Trust has no effect on the direction of Murphy Oil i.e., Murphy Oil and VOC Energy go up and down completely randomly.

Pair Corralation between Murphy Oil and VOC Energy

Considering the 90-day investment horizon Murphy Oil is expected to generate 0.73 times more return on investment than VOC Energy. However, Murphy Oil is 1.38 times less risky than VOC Energy. It trades about 0.01 of its potential returns per unit of risk. VOC Energy Trust is currently generating about -0.15 per unit of risk. If you would invest  2,833  in Murphy Oil on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Murphy Oil or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Murphy Oil  vs.  VOC Energy Trust

Murphy Oil

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Murphy Oil are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

VOC Energy Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days VOC Energy Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Murphy Oil and VOC Energy

The main advantage of trading using opposite Murphy Oil and VOC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy Oil position performs unexpectedly, VOC Energy 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 VOC Energy will offset losses from the drop in VOC Energy's long position.

The idea behind Murphy Oil and VOC Energy Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.