Correlation Between Murphy USA and Caseys General

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Can any of the company-specific risk be diversified away by investing in both Murphy USA and Caseys General 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 Caseys General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murphy USA and Caseys General Stores, you can compare the effects of market volatilities on Murphy USA and Caseys General 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 Caseys General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy USA and Caseys General.

Diversification Opportunities for Murphy USA and Caseys General

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Murphy and Caseys is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Murphy USA and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Murphy USA i.e., Murphy USA and Caseys General go up and down completely randomly.

Pair Corralation between Murphy USA and Caseys General

Given the investment horizon of 90 days Murphy USA is expected to generate 0.92 times more return on investment than Caseys General. However, Murphy USA is 1.09 times less risky than Caseys General. It trades about 0.09 of its potential returns per unit of risk. Caseys General Stores is currently generating about 0.08 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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Murphy USA  vs.  Caseys General Stores

 Performance 
       Timeline  
Murphy USA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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.
Caseys General Stores 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Murphy USA and Caseys General Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Murphy USA and Caseys General

The main advantage of trading using opposite Murphy USA and Caseys General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy USA position performs unexpectedly, Caseys General 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 Caseys General will offset losses from the drop in Caseys General's long position.
The idea behind Murphy USA and Caseys General Stores 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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