Correlation Between Black Stone and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Black Stone 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 Black Stone and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Stone Minerals and Marathon Oil, you can compare the effects of market volatilities on Black Stone 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 Black Stone with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Stone and Marathon Oil.
Diversification Opportunities for Black Stone and Marathon Oil
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and Marathon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Black Stone Minerals and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and Black Stone 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 Black Stone Minerals 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 Black Stone i.e., Black Stone and Marathon Oil go up and down completely randomly.
Pair Corralation between Black Stone and Marathon Oil
Considering the 90-day investment horizon Black Stone is expected to generate 1.69 times less return on investment than Marathon Oil. But when comparing it to its historical volatility, Black Stone Minerals is 2.0 times less risky than Marathon Oil. It trades about 0.24 of its potential returns per unit of risk. Marathon Oil is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,635 in Marathon Oil on August 24, 2024 and sell it today you would earn a total of 220.00 from holding Marathon Oil or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Stone Minerals vs. Marathon Oil
Performance |
| Timeline |
| Black Stone Minerals |
| Marathon Oil |
Black Stone and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Stone and Marathon Oil
The main advantage of trading using opposite Black Stone and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Stone 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.| Black Stone vs. Dorchester Minerals LP | Black Stone vs. Sitio Royalties Corp | Black Stone vs. MV Oil Trust | Black Stone vs. VOC Energy Trust |
| Marathon Oil vs. EOG Resources | Marathon Oil vs. Diamondback Energy | Marathon Oil vs. Hess Corporation | Marathon Oil vs. Devon Energy |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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