Correlation Between Marathon Oil and BOND FUND

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

Diversification Opportunities for Marathon Oil and BOND FUND

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Marathon and BFAFX is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and BOND FUND OF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOND FUND 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 BOND FUND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOND FUND has no effect on the direction of Marathon Oil i.e., Marathon Oil and BOND FUND go up and down completely randomly.

Pair Corralation between Marathon Oil and BOND FUND

Considering the 90-day investment horizon Marathon Oil is expected to under-perform the BOND FUND. In addition to that, Marathon Oil is 4.05 times more volatile than BOND FUND OF. It trades about -0.28 of its total potential returns per unit of risk. BOND FUND OF is currently generating about 0.39 per unit of volatility. If you would invest  1,105  in BOND FUND OF on September 10, 2022 and sell it today you would earn a total of  57.00  from holding BOND FUND OF or generate 5.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Marathon Oil  vs.  BOND FUND OF

 Performance (%) 
       Timeline  
Marathon Oil 
Marathon Performance
0 of 100
Over the last 90 days Marathon Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Marathon Oil is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Marathon Price Channel

BOND FUND 
BFAFX Performance
0 of 100
Over the last 90 days BOND FUND OF has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, BOND FUND is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BFAFX Price Channel

Marathon Oil and BOND FUND Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marathon Oil and BOND FUND

The main advantage of trading using opposite Marathon Oil and BOND FUND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, BOND FUND 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 BOND FUND will offset losses from the drop in BOND FUND's long position.
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The idea behind Marathon Oil and BOND FUND OF 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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