Correlation Between Marathon Oil and Broadridge Financial
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and Broadridge Financial 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 Marathon Oil and Broadridge Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Oil Corp and Broadridge Financial Solutions, you can compare the effects of market volatilities on Marathon Oil and Broadridge Financial 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 Marathon Oil with a short position of Broadridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and Broadridge Financial.
Diversification Opportunities for Marathon Oil and Broadridge Financial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Marathon and Broadridge is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil Corp and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial and Marathon 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 Marathon Oil Corp are associated (or correlated) with Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Marathon Oil i.e., Marathon Oil and Broadridge Financial go up and down completely randomly.
Pair Corralation between Marathon Oil and Broadridge Financial
Assuming the 90 days trading horizon Marathon Oil is expected to generate 1.78 times less return on investment than Broadridge Financial. But when comparing it to its historical volatility, Marathon Oil Corp is 1.12 times less risky than Broadridge Financial. It trades about 0.1 of its potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.16 of returns per unit of risk over similar time horizon. 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 |
Marathon Oil Corp vs. Broadridge Financial Solutions
Performance |
| Timeline |
| Marathon Oil Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Broadridge Financial |
Marathon Oil and Broadridge Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Oil and Broadridge Financial
The main advantage of trading using opposite Marathon Oil and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Broadridge Financial 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 Broadridge Financial will offset losses from the drop in Broadridge Financial's long position.| Marathon Oil vs. Broadridge Financial Solutions | Marathon Oil vs. Vulcan Materials Co | Marathon Oil vs. Morgan Advanced Materials | Marathon Oil vs. Taiwan Semiconductor Manufacturing |
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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