Correlation Between Marathon Oil and HighPeak Energy
Can any of the company-specific risk be diversified away by investing in both Marathon Oil and HighPeak 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 HighPeak 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 HighPeak Energy, you can compare the effects of market volatilities on Marathon Oil and HighPeak 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 HighPeak Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and HighPeak Energy.
Diversification Opportunities for Marathon Oil and HighPeak Energy
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Marathon and HighPeak is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and HighPeak Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HighPeak 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 HighPeak Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HighPeak Energy has no effect on the direction of Marathon Oil i.e., Marathon Oil and HighPeak Energy go up and down completely randomly.
Pair Corralation between Marathon Oil and HighPeak Energy
Considering the 90-day investment horizon Marathon Oil is expected to under-perform the HighPeak Energy. But the stock apears to be less risky and, when comparing its historical volatility, Marathon Oil is 5.66 times less risky than HighPeak Energy. The stock trades about -0.17 of its potential returns per unit of risk. The HighPeak Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 551.00 in HighPeak Energy on February 21, 2024 and sell it today you would lose (26.00) from holding HighPeak Energy or give up 4.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Marathon Oil vs. HighPeak Energy
Performance |
Timeline |
Marathon Oil |
HighPeak Energy |
Marathon Oil and HighPeak Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marathon Oil and HighPeak Energy
The main advantage of trading using opposite Marathon Oil and HighPeak Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, HighPeak 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 HighPeak Energy will offset losses from the drop in HighPeak Energy's long position.Marathon Oil vs. EOG Resources | Marathon Oil vs. Diamondback Energy | Marathon Oil vs. Hess Corporation | Marathon Oil vs. Devon Energy |
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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 the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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