Correlation Between Murphy USA and Group 1

Can any of the company-specific risk be diversified away by investing in both Murphy USA and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Murphy USA and Group 1 Automotive, you can compare the effects of market volatilities on Murphy USA and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murphy USA and Group 1.

Diversification Opportunities for Murphy USA and Group 1

-0.28

Correlation Coefficient

Murphy USA  Group 1

Very good diversification

The 3 months correlation between Murphy and Group is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Murphy USA and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Murphy USA i.e., Murphy USA and Group 1 go up and down completely randomly.

Pair Corralation between Murphy USA and Group 1

Given the investment horizon of 90 days Murphy USA is expected to under-perform the Group 1. In addition to that, Murphy USA is 1.23 times more volatile than Group 1 Automotive. It trades about -0.17 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.01 per unit of volatility. If you would invest  41,061  in Group 1 Automotive on May 6, 2025 and sell it today you would lose (319.00) from holding Group 1 Automotive or give up 0.78% of portfolio value over 90 days.

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

Murphy USA  vs.  Group 1 Automotive

Murphy USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Murphy USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Group 1 Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Group 1 Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Group 1 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Murphy USA and Group 1

The main advantage of trading using opposite Murphy USA and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murphy USA position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Murphy USA and Group 1 Automotive 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.