Correlation Between Chord Energy and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Chord Energy 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 Chord Energy and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chord Energy Corp and Marathon Oil, you can compare the effects of market volatilities on Chord Energy 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 Chord Energy with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chord Energy and Marathon Oil.
Diversification Opportunities for Chord Energy and Marathon Oil
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chord and Marathon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chord Energy Corp and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and Chord Energy 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 Chord Energy Corp 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 Chord Energy i.e., Chord Energy and Marathon Oil go up and down completely randomly.
Pair Corralation between Chord Energy and Marathon Oil
Given the investment horizon of 90 days Chord Energy Corp is expected to under-perform the Marathon Oil. But the stock apears to be less risky and, when comparing its historical volatility, Chord Energy Corp is 1.1 times less risky than Marathon Oil. The stock trades about -0.01 of its potential returns per unit of risk. The Marathon Oil is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,234 in Marathon Oil on August 28, 2024 and sell it today you would earn a total of 621.00 from holding Marathon Oil or generate 27.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.44% |
| Values | Daily Returns |
Chord Energy Corp vs. Marathon Oil
Performance |
| Timeline |
| Chord Energy Corp |
| Marathon Oil |
Chord Energy and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chord Energy and Marathon Oil
The main advantage of trading using opposite Chord Energy and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chord Energy 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.| Chord Energy vs. ConocoPhillips | Chord Energy vs. Occidental Petroleum | Chord Energy vs. EOG Resources | Chord Energy vs. Coterra Energy |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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