Correlation Between Marathon Oil and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and ConocoPhillips 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 Marathon Oil and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Oil and ConocoPhillips, you can compare the effects of market volatilities on Marathon Oil and ConocoPhillips 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 Marathon Oil with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and ConocoPhillips.
Diversification Opportunities for Marathon Oil and ConocoPhillips
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marathon and ConocoPhillips is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Marathon Oil 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 Marathon Oil are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Marathon Oil i.e., Marathon Oil and ConocoPhillips go up and down completely randomly.
Pair Corralation between Marathon Oil and ConocoPhillips
Assuming the 90 days trading horizon Marathon Oil is expected to generate 0.76 times more return on investment than ConocoPhillips. However, Marathon Oil is 1.31 times less risky than ConocoPhillips. It trades about 0.41 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.19 per unit of risk. If you would invest 14,799 in Marathon Oil on August 29, 2024 and sell it today you would earn a total of 2,216 from holding Marathon Oil or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Marathon Oil vs. ConocoPhillips
Performance |
| Timeline |
| Marathon Oil |
| ConocoPhillips |
Marathon Oil and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Oil and ConocoPhillips
The main advantage of trading using opposite Marathon Oil and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| Marathon Oil vs. Petro Rio SA | Marathon Oil vs. Banco BTG Pactual | Marathon Oil vs. Ambipar Participaes e | Marathon Oil vs. Mliuz SA |
| ConocoPhillips vs. Deutsche Bank Aktiengesellschaft | ConocoPhillips vs. MAHLE Metal Leve | ConocoPhillips vs. SVB Financial Group | ConocoPhillips vs. Iron Mountain Incorporated |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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