Correlation Between Murphy Oil and SilverBow Resources

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

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

Diversification Opportunities for Murphy Oil and SilverBow Resources

0.13

Correlation Coefficient

Murphy Oil  SilverBow Resources

Average diversification

The 3 months correlation between Murphy and SilverBow is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and SilverBow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverBow Resources 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 SilverBow Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverBow Resources has no effect on the direction of Murphy Oil i.e., Murphy Oil and SilverBow Resources go up and down completely randomly.

Pair Corralation between Murphy Oil and SilverBow Resources

If you would invest (100.00) in SilverBow Resources on September 17, 2024 and sell it today you would earn a total of  100.00  from holding SilverBow Resources or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Murphy Oil  vs.  SilverBow Resources

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 unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

SilverBow Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverBow Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SilverBow Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Murphy Oil and SilverBow Resources

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

The idea behind Murphy Oil and SilverBow Resources 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.