Correlation Between Marathon Oil and APA
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and APA 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 APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Oil and APA Corporation, you can compare the effects of market volatilities on Marathon Oil and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and APA.
Diversification Opportunities for Marathon Oil and APA
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marathon and APA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Marathon Oil i.e., Marathon Oil and APA go up and down completely randomly.
Pair Corralation between Marathon Oil and APA
Assuming the 90 days trading horizon Marathon Oil is expected to generate 0.38 times more return on investment than APA. However, Marathon Oil is 2.61 times less risky than APA. It trades about 0.09 of its potential returns per unit of risk. APA Corporation is currently generating about -0.04 per unit of risk. If you would invest 51,880 in Marathon Oil on September 13, 2024 and sell it today you would earn a total of 4,520 from holding Marathon Oil or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.4% |
| Values | Daily Returns |
Marathon Oil vs. APA Corp.
Performance |
| Timeline |
| Marathon Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| APA Corporation |
Marathon Oil and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Oil and APA
The main advantage of trading using opposite Marathon Oil and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Marathon Oil vs. Deutsche Bank Aktiengesellschaft | Marathon Oil vs. Cognizant Technology Solutions | Marathon Oil vs. Lloyds Banking Group | Marathon Oil vs. Southwest Airlines |
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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