Correlation Between Marathon Oil and Alphabet
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and Alphabet 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 Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Oil and Alphabet Inc Class C, you can compare the effects of market volatilities on Marathon Oil and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and Alphabet.
Diversification Opportunities for Marathon Oil and Alphabet
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marathon and Alphabet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of Marathon Oil i.e., Marathon Oil and Alphabet go up and down completely randomly.
Pair Corralation between Marathon Oil and Alphabet
Considering the 90-day investment horizon Marathon Oil is expected to under-perform the Alphabet. But the stock apears to be less risky and, when comparing its historical volatility, Marathon Oil is 1.94 times less risky than Alphabet. The stock trades about -0.2 of its potential returns per unit of risk. The Alphabet Inc Class C is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15,650 in Alphabet Inc Class C on February 1, 2024 and sell it today you would earn a total of 814.00 from holding Alphabet Inc Class C or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marathon Oil vs. Alphabet Inc Class C
Performance |
| Timeline |
| Marathon Oil |
| Alphabet Class C |
Marathon Oil and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Oil and Alphabet
The main advantage of trading using opposite Marathon Oil and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| Marathon Oil vs. EOG Resources | Marathon Oil vs. Diamondback Energy | Marathon Oil vs. Hess Corporation | Marathon Oil vs. Devon Energy |
| Alphabet vs. Digital Ally | Alphabet vs. Onfolio Holdings | Alphabet vs. Zhihu Inc ADR | Alphabet vs. Asset Entities Class |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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