Correlation Between Occidental Petroleum and Marathon Oil
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum 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 Occidental Petroleum and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Marathon Oil, you can compare the effects of market volatilities on Occidental Petroleum 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 Occidental Petroleum with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Marathon Oil.
Diversification Opportunities for Occidental Petroleum and Marathon Oil
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Occidental and Marathon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and Occidental Petroleum 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 Occidental Petroleum 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 Occidental Petroleum i.e., Occidental Petroleum and Marathon Oil go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Marathon Oil
Assuming the 90 days trading horizon Occidental Petroleum is expected to under-perform the Marathon Oil. But the stock apears to be less risky and, when comparing its historical volatility, Occidental Petroleum is 1.11 times less risky than Marathon Oil. The stock trades about -0.05 of its potential returns per unit of risk. The Marathon Oil is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,779 in Marathon Oil on September 27, 2024 and sell it today you would earn a total of 3,236 from holding Marathon Oil or generate 23.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.12% |
| Values | Daily Returns |
Occidental Petroleum vs. Marathon Oil
Performance |
| Timeline |
| Occidental Petroleum |
| Marathon Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Occidental Petroleum and Marathon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Marathon Oil
The main advantage of trading using opposite Occidental Petroleum and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum 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.| Occidental Petroleum vs. Waste Management | Occidental Petroleum vs. Paycom Software | Occidental Petroleum vs. United States Steel | Occidental Petroleum vs. Tres Tentos Agroindustrial |
| Marathon Oil vs. ConocoPhillips | Marathon Oil vs. EOG Resources | Marathon Oil vs. Occidental Petroleum | 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |