Correlation Between Chevron Corp and Marathon Oil

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Can any of the company-specific risk be diversified away by investing in both Chevron Corp 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 Chevron Corp and Marathon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Marathon Oil, you can compare the effects of market volatilities on Chevron Corp 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 Chevron Corp with a short position of Marathon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Marathon Oil.

Diversification Opportunities for Chevron Corp and Marathon Oil

  Correlation Coefficient

Poor diversification

The 3 months correlation between Chevron and Marathon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Marathon Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Oil and Chevron Corp 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 Chevron Corp 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 Chevron Corp i.e., Chevron Corp and Marathon Oil go up and down completely randomly.

Pair Corralation between Chevron Corp and Marathon Oil

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the Marathon Oil. In addition to that, Chevron Corp is 1.03 times more volatile than Marathon Oil. It trades about -0.05 of its total potential returns per unit of risk. Marathon Oil is currently generating about 0.06 per unit of volatility. If you would invest  2,564  in Marathon Oil on November 4, 2022 and sell it today you would earn a total of  55.00  from holding Marathon Oil or generate 2.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Chevron Corp  vs.  Marathon Oil

 Performance (%) 
Chevron Corp 
Chevron Performance
0 of 100
Over the last 90 days Chevron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chevron Price Channel

Marathon Oil 
Marathon Performance
0 of 100
Over the last 90 days Marathon Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Marathon Price Channel

Chevron Corp and Marathon Oil Volatility Contrast

   Predicted Return Density   

Pair Trading with Chevron Corp and Marathon Oil

The main advantage of trading using opposite Chevron Corp and Marathon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp 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.
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The idea behind Chevron Corp and Marathon Oil pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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