Correlation Between Murphy USA and Alimentation Couchen

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

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

Diversification Opportunities for Murphy USA and Alimentation Couchen

0.86

Correlation Coefficient

Murphy USA  Alimentation Couchen

Very poor diversification

The 3 months correlation between Murphy and Alimentation is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Murphy USA and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard and Murphy USA 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 USA are associated (or correlated) with Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of Murphy USA i.e., Murphy USA and Alimentation Couchen go up and down completely randomly.

Pair Corralation between Murphy USA and Alimentation Couchen

Given the investment horizon of 90 days Murphy USA is expected to generate 1.13 times more return on investment than Alimentation Couchen. However, Murphy USA is 1.13 times more volatile than Alimentation Couchen Tard. It trades about 0.09 of its potential returns per unit of risk. Alimentation Couchen Tard is currently generating about 0.03 per unit of risk. If you would invest  26,553  in Murphy USA on October 5, 2024 and sell it today you would earn a total of  22,815  from holding Murphy USA or generate 85.92% return on investment over 90 days.

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

Murphy USA  vs.  Alimentation Couchen Tard

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.

Alimentation Couchen Tard

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alimentation Couchen Tard are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alimentation Couchen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Murphy USA and Alimentation Couchen

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

The idea behind Murphy USA and Alimentation Couchen Tard 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.