Correlation Between Marathon Oil and COCOS BCX

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

Diversification Opportunities for Marathon Oil and COCOS BCX

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Marathon and COCOS is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil Corp and COCOS BCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCOS BCX 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 Corp are associated (or correlated) with COCOS BCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCOS BCX has no effect on the direction of Marathon Oil i.e., Marathon Oil and COCOS BCX go up and down completely randomly.

Pair Corralation between Marathon Oil and COCOS BCX

Considering the 90-day investment horizon Marathon Oil is expected to generate 466.12 times less return on investment than COCOS BCX. But when comparing it to its historical volatility, Marathon Oil Corp is 115.33 times less risky than COCOS BCX. It trades about 0.1 of its potential returns per unit of risk. COCOS BCX is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  0.06  in COCOS BCX on August 31, 2022 and sell it today you would earn a total of  63.94  from holding COCOS BCX or generate 101326.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy58.28%
ValuesDaily Returns

Marathon Oil Corp  vs.  COCOS BCX

 Performance (%) 
       Timeline  
Marathon Oil Corp 
Marathon Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Oil Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Marathon Oil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Marathon Price Channel

COCOS BCX 
COCOS Performance
21 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in COCOS BCX are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COCOS BCX sustained solid returns over the last few months and may actually be approaching a breakup point.

COCOS Price Channel

Marathon Oil and COCOS BCX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marathon Oil and COCOS BCX

The main advantage of trading using opposite Marathon Oil and COCOS BCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, COCOS BCX 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 COCOS BCX will offset losses from the drop in COCOS BCX's long position.
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The idea behind Marathon Oil Corp and COCOS BCX 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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