Correlation Between Chord Energy and Murphy Oil

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

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

Diversification Opportunities for Chord Energy and Murphy Oil

0.92

Correlation Coefficient

Chord Energy  Murphy Oil

Almost no diversification

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

Pair Corralation between Chord Energy and Murphy Oil

Given the investment horizon of 90 days Chord Energy Corp is expected to under-perform the Murphy Oil. But the stock apears to be less risky and, when comparing its historical volatility, Chord Energy Corp is 1.17 times less risky than Murphy Oil. The stock trades about -0.09 of its potential returns per unit of risk. The Murphy Oil is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,360  in Murphy Oil on September 12, 2024 and sell it today you would lose (333.00) from holding Murphy Oil or give up 9.91% of portfolio value over 90 days.

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

Chord Energy Corp  vs.  Murphy Oil

Chord Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chord Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Murphy Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Murphy Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Chord Energy and Murphy Oil

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

The idea behind Chord Energy Corp and Murphy Oil 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 CEOs Directory module to screen CEOs from public companies around the world.