Correlation Between Science Applications and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Science Applications and Marathon Petroleum 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 Science Applications and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Marathon Petroleum Corp, you can compare the effects of market volatilities on Science Applications and Marathon Petroleum 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 Science Applications with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Marathon Petroleum.
Diversification Opportunities for Science Applications and Marathon Petroleum
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Science and Marathon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Marathon Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum Corp and Science Applications 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 Science Applications International are associated (or correlated) with Marathon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Petroleum Corp has no effect on the direction of Science Applications i.e., Science Applications and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Science Applications and Marathon Petroleum
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Marathon Petroleum. In addition to that, Science Applications is 2.16 times more volatile than Marathon Petroleum Corp. It trades about -0.28 of its total potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.02 per unit of volatility. If you would invest 14,219 in Marathon Petroleum Corp on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Marathon Petroleum Corp or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Science Applications |
| Marathon Petroleum Corp |
Science Applications and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Marathon Petroleum
The main advantage of trading using opposite Science Applications and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications position performs unexpectedly, Marathon Petroleum 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 Petroleum will offset losses from the drop in Marathon Petroleum's long position.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
| Marathon Petroleum vs. Iridium Communications | Marathon Petroleum vs. CVS Health | Marathon Petroleum vs. CHINA TELECOM H | Marathon Petroleum vs. FEMALE HEALTH |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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