Correlation Between Marathon Oil and Genesis Technology

Can any of the company-specific risk be diversified away by investing in both Marathon Oil and Genesis Technology 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 Genesis Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marathon Oil and Genesis Technology, you can compare the effects of market volatilities on Marathon Oil and Genesis Technology 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 Genesis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and Genesis Technology.

Diversification Opportunities for Marathon Oil and Genesis Technology

0.97

Correlation Coefficient

Marathon Oil  Genesis Technology

Almost no diversification

The 3 months correlation between Marathon and Genesis is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology 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 Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Marathon Oil i.e., Marathon Oil and Genesis Technology go up and down completely randomly.

Pair Corralation between Marathon Oil and Genesis Technology

Considering the 90-day investment horizon Marathon Oil is expected to generate 1.49 times less return on investment than Genesis Technology. In addition to that, Marathon Oil is 1.08 times more volatile than Genesis Technology. It trades about 0.23 of its total potential returns per unit of risk. Genesis Technology is currently generating about 0.38 per unit of volatility. If you would invest  6,550  in Genesis Technology on January 26, 2024 and sell it today you would earn a total of  1,700  from holding Genesis Technology or generate 25.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	87.1%
Values	Daily Returns

Marathon Oil  vs.  Genesis Technology

Marathon Oil

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Oil are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Marathon Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Genesis Technology

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Technology are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Genesis Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Oil and Genesis Technology

The main advantage of trading using opposite Marathon Oil and Genesis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Genesis Technology 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 Genesis Technology will offset losses from the drop in Genesis Technology's long position.

The idea behind Marathon Oil and Genesis Technology 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.