Correlation Between APA and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both APA 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 APA and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Marathon Oil, you can compare the effects of market volatilities on APA 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 APA with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Marathon Oil.
Diversification Opportunities for APA and Marathon Oil
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APA and Marathon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and APA 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 APA Corporation 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 has no effect on the direction of APA i.e., APA and Marathon Oil go up and down completely randomly.
Pair Corralation between APA and Marathon Oil
Assuming the 90 days trading horizon APA Corporation is expected to under-perform the Marathon Oil. In addition to that, APA is 1.2 times more volatile than Marathon Oil. It trades about -0.03 of its total potential returns per unit of risk. Marathon Oil is currently generating about 0.06 per unit of volatility. If you would invest 41,207 in Marathon Oil on September 12, 2024 and sell it today you would earn a total of 15,193 from holding Marathon Oil or generate 36.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.59% |
| Values | Daily Returns |
APA Corp. vs. Marathon Oil
Performance |
| Timeline |
| APA Corporation |
| Marathon Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
APA and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and Marathon Oil
The main advantage of trading using opposite APA and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA 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.| APA vs. Cognizant Technology Solutions | APA vs. Grupo Sports World | APA vs. United States Steel | APA vs. Samsung Electronics Co |
| Marathon Oil vs. ConocoPhillips | Marathon Oil vs. Devon Energy | Marathon Oil vs. Cabot Oil Gas | Marathon Oil vs. APA Corporation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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