Correlation Between Marathon Oil and Itasa Investimentos

Can any of the company-specific risk be diversified away by investing in both Marathon Oil and Itasa Investimentos 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 Itasa Investimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marathon Oil and Itasa Investimentos, you can compare the effects of market volatilities on Marathon Oil and Itasa Investimentos 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 Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Oil and Itasa Investimentos.

Diversification Opportunities for Marathon Oil and Itasa Investimentos

-0.5

Correlation Coefficient

Marathon Oil  Itasa Investimentos

Very good diversification

The 3 months correlation between Marathon and Itasa is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos 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 Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Marathon Oil i.e., Marathon Oil and Itasa Investimentos go up and down completely randomly.

Pair Corralation between Marathon Oil and Itasa Investimentos

Assuming the 90 days trading horizon Marathon Oil is expected to generate 1.73 times more return on investment than Itasa Investimentos. However, Marathon Oil is 1.73 times more volatile than Itasa Investimentos. It trades about 0.06 of its potential returns per unit of risk. Itasa Investimentos is currently generating about -0.17 per unit of risk. If you would invest  16,000  in Marathon Oil on September 4, 2024 and sell it today you would earn a total of  1,015  from holding Marathon Oil or generate 6.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

Marathon Oil  vs.  Itasa Investimentos

Marathon Oil

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Marathon Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat uncertain basic indicators, Marathon Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Itasa Investimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itasa Investimentos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Marathon Oil and Itasa Investimentos

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

The idea behind Marathon Oil and Itasa Investimentos 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.

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 the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.