Correlation Between 00108WAF7 and MARATHON

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and MARATHON 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 00108WAF7 and MARATHON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and MARATHON PETE P, you can compare the effects of market volatilities on 00108WAF7 and MARATHON 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 00108WAF7 with a short position of MARATHON. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and MARATHON.

Diversification Opportunities for 00108WAF7 and MARATHON

0.13

Correlation Coefficient

00108WAF7  MARATHON

Average diversification

The 3 months correlation between 00108WAF7 and MARATHON is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and MARATHON PETE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARATHON PETE P and 00108WAF7 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 AEP TEX INC are associated (or correlated) with MARATHON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARATHON PETE P has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and MARATHON go up and down completely randomly.

Pair Corralation between 00108WAF7 and MARATHON

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 1.11 times more return on investment than MARATHON. However, 00108WAF7 is 1.11 times more volatile than MARATHON PETE P. It trades about 0.06 of its potential returns per unit of risk. MARATHON PETE P is currently generating about 0.07 per unit of risk. If you would invest  7,420  in AEP TEX INC on October 26, 2024 and sell it today you would earn a total of  248.00  from holding AEP TEX INC or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.18%
Values	Daily Returns

AEP TEX INC  vs.  MARATHON PETE P

AEP TEX INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MARATHON PETE P

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MARATHON PETE P are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MARATHON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 00108WAF7 and MARATHON

The main advantage of trading using opposite 00108WAF7 and MARATHON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, MARATHON 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 MARATHON will offset losses from the drop in MARATHON's long position.

The idea behind AEP TEX INC and MARATHON PETE P 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.