Shares of Marathon Oil (NYSE: MRO) trended lower due to a sharp drop in benchmark prices triggered by new restrictions imposed in Europe and concerns about vaccine safety. The Company explores and produces crude oil, condensates and natural gas in the United States and certain international locations. As a result of the pandemic, the company’s revenue saw a 40% contraction (year-over-year) and a net loss of $ 1.4 billion in 2020. Overall, the EIA expects the The WTI benchmark averages $ 60 / bbl in 2021, negatively affecting the revenues and margins of upstream companies. . While OPEC’s supply side constraints supported benchmark prices, demand factors again became a concern. Taking into account the correction of the reference prices, Trefis believes that Marathon Oil stock will continue to underperform larger markets.
But how would Marathon Oil’s stock returns change if you wanted to hold it for a shorter or longer period? You can test the answer and many other combinations on the Trefis Machine Learning Engine Tests Chances Of Marathon Oil Stocks Rising After Fall. You can test the chances of recovery over different time intervals of a quarter, a month, or even a single day!
MACHINE LEARNING MOTOR – try it yourself:
IF The MRO share has changed by -5% over five trading days, THEN over the next twenty-one trading days, the MRO share moves average of -0.2%, which implies a excess return -0.8% compared to the S & P500.
More importantly, there is a 50% chance that a positive feedback over the next twenty-one trading days and 44% probability positive excess return after a variation of -5% over five trading days.
Some fun scenarios, FAQs, and an idea of Marathon’s oil stock movements:
Question 1: Is the average return of Marathon Oil share higher after a decline?
Consider two situations,
Case 1: Marathon Oil stock drops by -5% or more in a week
Case 2: Marathon Oil stock increases by 5% or more in a week
Is the average Marathon Oil share return higher in the next month after case 1 or 2?
MRO stock fares better after case 2, with an average return of -0.1% over the following month (21 trading days) in case 1 (where the stock has just suffered a loss of 5% over the previous week), against an average return of 3 , 4% for case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in Case 1, and an average return of only 0.5% for Case 2, as detailed in our dashboard. which details the average return of the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how the Marathon Oil stock is likely to behave after a specific gain or loss over a period of time.
Question 2: Does patience pay?
If you buy and hold shares in Marathon Oil, it is expected that over time the short-term fluctuations will cancel each other out and the positive long-term trend will favor you – at least if the company is otherwise strong.
Overall, according to data and calculations from Trefis’ machine learning engine, patience absolutely pays for most of the stock!
For the MRO stock, the returns over the next N days after a -5% change over the last 5 trading days are detailed in the table below, along with the returns of the S & P500:
You can try out the engine to see what this chart looks like for Marathon Oil after losing more in the past week, month, or quarter.
Question 3: What about the average return after a rise if you wait a while?
The average return after a rise is naturally lower than after a fall, as detailed in the previous question. Interestingly, however, if a stock has won in the last few days, you’d better avoid short-term bets for most stocks – although MRO stock seems to be an exception to this general observation.
MRO returns over the next N days after a 5% change in the last 5 trading days are detailed in the table below, along with the S & P500 returns:
It is powerful enough to test the trend of the Marathon Oil stock for yourself by changing the entries in the charts above.
With MRO stock being a risky bet due to a third wave of coronavirus in Europe, 2020 has created many price discontinuities that may provide some exciting trading opportunities. For example, you will be surprised at how the valuation of stocks for Magellan Midstream Partners vs. Coca-Cola shows a disconnect with their relative operational growth. You can find a lot of them discontinuous pairs here.
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