Correlation Between Marathon Oil and PAR Technology

Can any of the company-specific risk be diversified away by investing in both Marathon Oil and PAR 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 PAR 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 PAR Technology, you can compare the effects of market volatilities on Marathon Oil and PAR 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 PAR Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and PAR Technology.

Diversification Opportunities for Marathon Oil and PAR Technology

-0.57

Correlation Coefficient

Marathon Oil  PAR Technology

Excellent diversification

The 3 months correlation between Marathon and PAR is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR 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 PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of Marathon Oil i.e., Marathon Oil and PAR Technology go up and down completely randomly.

Pair Corralation between Marathon Oil and PAR Technology

Considering the 90-day investment horizon Marathon Oil is expected to generate 0.59 times more return on investment than PAR Technology. However, Marathon Oil is 1.71 times less risky than PAR Technology. It trades about 0.02 of its potential returns per unit of risk. PAR Technology is currently generating about -0.07 per unit of risk. If you would invest  2,757  in Marathon Oil on January 24, 2024 and sell it today you would earn a total of  8.00  from holding Marathon Oil or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Marathon Oil  vs.  PAR Technology

Marathon Oil

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Oil are ranked lower than 21 (%) 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.

PAR Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAR Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Marathon Oil and PAR Technology

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

The idea behind Marathon Oil and PAR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.