Correlation Between Dow Jones and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Marathon Oil Corp, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Marathon Oil.
Diversification Opportunities for Dow Jones and Marathon Oil
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Marathon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Marathon Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil Corp and Dow Jones 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 Dow Jones Industrial 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 Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Marathon Oil go up and down completely randomly.
Pair Corralation between Dow Jones and Marathon Oil
Assuming the 90 days trading horizon Dow Jones is expected to generate 93.47 times less return on investment than Marathon Oil. But when comparing it to its historical volatility, Dow Jones Industrial is 1.56 times less risky than Marathon Oil. It trades about 0.0 of its potential returns per unit of risk. Marathon Oil Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,836 in Marathon Oil Corp on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Marathon Oil Corp or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 40.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. Marathon Oil Corp
Performance |
| Timeline |
Dow Jones and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Marathon Oil Corp
Pair trading matchups for Marathon Oil
Pair Trading with Dow Jones and Marathon Oil
The main advantage of trading using opposite Dow Jones and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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