Correlation Between Murphy USA and Creative Global

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

By analyzing existing cross correlation between Murphy USA and Creative Global Technology, you can compare the effects of market volatilities on Murphy USA and Creative Global 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 Creative Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy USA and Creative Global.

Diversification Opportunities for Murphy USA and Creative Global

-0.61

Correlation Coefficient

Murphy USA  Creative Global

Excellent diversification

The 3 months correlation between Murphy and Creative is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Murphy USA and Creative Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Global Tech 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 Creative Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Global Tech has no effect on the direction of Murphy USA i.e., Murphy USA and Creative Global go up and down completely randomly.

Pair Corralation between Murphy USA and Creative Global

Given the investment horizon of 90 days Murphy USA is expected to generate 840.19 times less return on investment than Creative Global. But when comparing it to its historical volatility, Murphy USA is 165.64 times less risky than Creative Global. It trades about 0.05 of its potential returns per unit of risk. Creative Global Technology is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Creative Global Technology on September 21, 2024 and sell it today you would earn a total of  800.00  from holding Creative Global Technology or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	14.29%
Values	Daily Returns

Murphy USA  vs.  Creative Global Technology

Murphy USA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Murphy USA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Murphy USA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Creative Global Tech

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Global Technology are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Creative Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Murphy USA and Creative Global

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

The idea behind Murphy USA and Creative Global Technology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.