Correlation Between Murphy Oil and Woodside Energy

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

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

Diversification Opportunities for Murphy Oil and Woodside Energy

0.8

Correlation Coefficient

Murphy Oil  Woodside Energy

Very poor diversification

The 3 months correlation between Murphy and Woodside is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Murphy Oil and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group 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 Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of Murphy Oil i.e., Murphy Oil and Woodside Energy go up and down completely randomly.

Pair Corralation between Murphy Oil and Woodside Energy

Considering the 90-day investment horizon Murphy Oil is expected to under-perform the Woodside Energy. In addition to that, Murphy Oil is 1.05 times more volatile than Woodside Energy Group. It trades about -0.07 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about -0.05 per unit of volatility. If you would invest  1,952  in Woodside Energy Group on September 14, 2024 and sell it today you would lose (425.00) from holding Woodside Energy Group or give up 21.77% of portfolio value over 90 days.

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

Murphy Oil  vs.  Woodside Energy Group

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.

Woodside Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Murphy Oil and Woodside Energy

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

The idea behind Murphy Oil and Woodside Energy Group 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.