Correlation Between Magnolia Oil and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Magnolia Oil 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 Magnolia Oil and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnolia Oil Gas and Marathon Oil, you can compare the effects of market volatilities on Magnolia Oil 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 Magnolia Oil with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnolia Oil and Marathon Oil.
Diversification Opportunities for Magnolia Oil and Marathon Oil
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnolia and Marathon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Magnolia Oil Gas and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and Magnolia 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 Magnolia Oil Gas 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 Magnolia Oil i.e., Magnolia Oil and Marathon Oil go up and down completely randomly.
Pair Corralation between Magnolia Oil and Marathon Oil
Considering the 90-day investment horizon Magnolia Oil Gas is expected to generate 1.09 times more return on investment than Marathon Oil. However, Magnolia Oil is 1.09 times more volatile than Marathon Oil. It trades about 0.25 of its potential returns per unit of risk. Marathon Oil is currently generating about 0.26 per unit of risk. If you would invest 2,545 in Magnolia Oil Gas on August 28, 2024 and sell it today you would earn a total of 274.00 from holding Magnolia Oil Gas or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Magnolia Oil Gas vs. Marathon Oil
Performance |
| Timeline |
| Magnolia Oil Gas |
| Marathon Oil |
Magnolia Oil and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnolia Oil and Marathon Oil
The main advantage of trading using opposite Magnolia Oil and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnolia Oil 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.| Magnolia Oil vs. Devon Energy | Magnolia Oil vs. ConocoPhillips | Magnolia Oil vs. Occidental Petroleum | Magnolia Oil vs. Permian Resources |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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