Correlation Between Marathon Oil and Beach Energy
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and Beach Energy 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 Beach Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Oil and Beach Energy, you can compare the effects of market volatilities on Marathon Oil and Beach Energy 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 Beach Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and Beach Energy.
Diversification Opportunities for Marathon Oil and Beach Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marathon and Beach is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Beach Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beach Energy 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 Beach Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beach Energy has no effect on the direction of Marathon Oil i.e., Marathon Oil and Beach Energy go up and down completely randomly.
Pair Corralation between Marathon Oil and Beach Energy
If you would invest 2,578 in Marathon Oil on August 30, 2024 and sell it today you would earn a total of 277.00 from holding Marathon Oil or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
Marathon Oil vs. Beach Energy
Performance |
| Timeline |
| Marathon Oil |
| Beach Energy |
Marathon Oil and Beach Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Oil and Beach Energy
The main advantage of trading using opposite Marathon Oil and Beach Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Beach Energy 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 Beach Energy will offset losses from the drop in Beach Energy's long position.| Marathon Oil vs. EOG Resources | Marathon Oil vs. Diamondback Energy | Marathon Oil vs. Hess Corporation | Marathon Oil vs. Devon Energy |
| Beach Energy vs. EOG Resources | Beach Energy vs. Devon Energy | Beach Energy vs. Marathon Oil | Beach Energy vs. Diamondback 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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