Correlation Between Citigroup and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Marathon Oil, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Marathon Oil.
Diversification Opportunities for Citigroup and Marathon Oil
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Marathon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Marathon Oil go up and down completely randomly.
Pair Corralation between Citigroup and Marathon Oil
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Marathon Oil. However, Citigroup is 1.47 times less risky than Marathon Oil. It trades about 0.07 of its potential returns per unit of risk. Marathon Oil is currently generating about 0.03 per unit of risk. If you would invest 4,134 in Citigroup on August 30, 2024 and sell it today you would earn a total of 2,882 from holding Citigroup or generate 69.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.42% |
| Values | Daily Returns |
Citigroup vs. Marathon Oil
Performance |
| Timeline |
| Citigroup |
| Marathon Oil |
Citigroup and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Marathon Oil
The main advantage of trading using opposite Citigroup and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Marathon Oil vs. Petro Rio SA | Marathon Oil vs. Banco BTG Pactual | Marathon Oil vs. Ambipar Participaes e | Marathon Oil vs. Mliuz SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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