Correlation Between Marathon Oil and So Carlos

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

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

Diversification Opportunities for Marathon Oil and So Carlos

-0.42

Correlation Coefficient

Marathon Oil  So Carlos

Very good diversification

The 3 months correlation between Marathon and SCAR3 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Oil and So Carlos Empreendimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Carlos Empreendimentos 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 So Carlos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Carlos Empreendimentos has no effect on the direction of Marathon Oil i.e., Marathon Oil and So Carlos go up and down completely randomly.

Pair Corralation between Marathon Oil and So Carlos

Assuming the 90 days trading horizon Marathon Oil is expected to generate 1.09 times more return on investment than So Carlos. However, Marathon Oil is 1.09 times more volatile than So Carlos Empreendimentos. It trades about 0.16 of its potential returns per unit of risk. So Carlos Empreendimentos is currently generating about -0.15 per unit of risk. If you would invest  14,670  in Marathon Oil on September 16, 2024 and sell it today you would earn a total of  2,345  from holding Marathon Oil or generate 15.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Marathon Oil  vs.  So Carlos Empreendimentos

Marathon Oil

Risk-Adjusted Performance

0 of 100

Good

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 sustained solid returns over the last few months and may actually be approaching a breakup point.

So Carlos Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days So Carlos Empreendimentos 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 So Carlos

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

The idea behind Marathon Oil and So Carlos Empreendimentos 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.