Correlation Between Marathon Oil and Vermilion Energy
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and Vermilion 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 Vermilion 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 Vermilion Energy, you can compare the effects of market volatilities on Marathon Oil and Vermilion 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 Vermilion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and Vermilion Energy.
Diversification Opportunities for Marathon Oil and Vermilion Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marathon and Vermilion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Vermilion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vermilion 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 Vermilion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vermilion Energy has no effect on the direction of Marathon Oil i.e., Marathon Oil and Vermilion Energy go up and down completely randomly.
Pair Corralation between Marathon Oil and Vermilion Energy
Considering the 90-day investment horizon Marathon Oil is expected to generate 0.72 times more return on investment than Vermilion Energy. However, Marathon Oil is 1.39 times less risky than Vermilion Energy. It trades about 0.26 of its potential returns per unit of risk. Vermilion Energy is currently generating about 0.17 per unit of risk. If you would invest 2,601 in Marathon Oil on August 27, 2024 and sell it today you would earn a total of 254.00 from holding Marathon Oil or generate 9.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Marathon Oil vs. Vermilion Energy
Performance |
| Timeline |
| Marathon Oil |
| Vermilion Energy |
Marathon Oil and Vermilion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Oil and Vermilion Energy
The main advantage of trading using opposite Marathon Oil and Vermilion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Vermilion 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 Vermilion Energy will offset losses from the drop in Vermilion Energy's long position.| Marathon Oil vs. EOG Resources | Marathon Oil vs. Diamondback Energy | Marathon Oil vs. Hess Corporation | Marathon Oil vs. Devon Energy |
| Vermilion Energy vs. Devon Energy | Vermilion Energy vs. ConocoPhillips | Vermilion Energy vs. Occidental Petroleum | Vermilion Energy vs. Permian Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |