Correlation Between Marathon Oil and Momentus

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

Diversification Opportunities for Marathon Oil and Momentus

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Marathon and Momentus is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus 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 Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of Marathon Oil i.e., Marathon Oil and Momentus go up and down completely randomly.

Pair Corralation between Marathon Oil and Momentus

Considering the 90-day investment horizon Marathon Oil is expected to generate 0.59 times more return on investment than Momentus. However, Marathon Oil is 1.69 times less risky than Momentus. It trades about 0.02 of its potential returns per unit of risk. Momentus is currently generating about -0.18 per unit of risk. If you would invest  2,968  in Marathon Oil on September 3, 2022 and sell it today you would earn a total of  6.00  from holding Marathon Oil or generate 0.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Marathon Oil  vs.  Momentus

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

Marathon Price Channel

Momentus 
Momentus Performance
0 of 100
Over the last 90 days Momentus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Momentus Price Channel

Marathon Oil and Momentus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marathon Oil and Momentus

The main advantage of trading using opposite Marathon Oil and Momentus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Momentus 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 Momentus will offset losses from the drop in Momentus' long position.
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The idea behind Marathon Oil and Momentus 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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