Correlation Between Marathon Oil and Jacquet Metal

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

Diversification Opportunities for Marathon Oil and Jacquet Metal

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Marathon and Jacquet is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Marathon Oil i.e., Marathon Oil and Jacquet Metal go up and down completely randomly.

Pair Corralation between Marathon Oil and Jacquet Metal

Considering the 90-day investment horizon Marathon Oil is expected to generate 1.44 times more return on investment than Jacquet Metal. However, Marathon Oil is 1.44 times more volatile than Jacquet Metal Service. It trades about 0.1 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.03 per unit of risk. If you would invest  638.00  in Marathon Oil on September 10, 2022 and sell it today you would earn a total of  2,046  from holding Marathon Oil or generate 320.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy97.64%
ValuesDaily Returns

Marathon Oil  vs.  Jacquet Metal Service

 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

Jacquet Metal Service 
Jacquet Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jacquet Metal may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Jacquet Price Channel

Marathon Oil and Jacquet Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marathon Oil and Jacquet Metal

The main advantage of trading using opposite Marathon Oil and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Oil position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.
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The idea behind Marathon Oil and Jacquet Metal Service 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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