Correlation Between Broadridge Financial and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Broadridge Financial and Marathon 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 Broadridge Financial and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadridge Financial Solutions and Marathon Oil Corp, you can compare the effects of market volatilities on Broadridge Financial and Marathon 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 Broadridge Financial with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and Marathon Oil.
Diversification Opportunities for Broadridge Financial and Marathon Oil
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Broadridge and Marathon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Marathon Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil Corp and Broadridge Financial 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 Broadridge Financial Solutions are associated (or correlated) with Marathon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Oil Corp has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Marathon Oil go up and down completely randomly.
Pair Corralation between Broadridge Financial and Marathon Oil
Assuming the 90 days trading horizon Broadridge Financial Solutions is expected to generate 1.12 times more return on investment than Marathon Oil. However, Broadridge Financial is 1.12 times more volatile than Marathon Oil Corp. It trades about 0.16 of its potential returns per unit of risk. Marathon Oil Corp is currently generating about 0.1 per unit of risk. If you would invest 22,869 in Broadridge Financial Solutions on September 14, 2024 and sell it today you would earn a total of 763.00 from holding Broadridge Financial Solutions or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.36% |
| Values | Daily Returns |
Broadridge Financial Solutions vs. Marathon Oil Corp
Performance |
| Timeline |
| Broadridge Financial |
| Marathon Oil Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Broadridge Financial and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadridge Financial and Marathon Oil
The main advantage of trading using opposite Broadridge Financial and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial position performs unexpectedly, Marathon 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 Marathon Oil will offset losses from the drop in Marathon Oil's long position.The idea behind Broadridge Financial Solutions and Marathon Oil Corp 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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