Correlation Between Align Technology and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Align Technology 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 Align Technology and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Marathon Petroleum, you can compare the effects of market volatilities on Align Technology 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 Align Technology with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Marathon Petroleum.
Diversification Opportunities for Align Technology and Marathon Petroleum
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Align and Marathon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and Align Technology 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 Align Technology 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 has no effect on the direction of Align Technology i.e., Align Technology and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Align Technology and Marathon Petroleum
Assuming the 90 days trading horizon Align Technology is expected to under-perform the Marathon Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Align Technology is 3.23 times less risky than Marathon Petroleum. The stock trades about -0.04 of its potential returns per unit of risk. The Marathon Petroleum is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 89,190 in Marathon Petroleum on October 25, 2024 and sell it today you would earn a total of 1,614 from holding Marathon Petroleum or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Marathon Petroleum
Performance |
| Timeline |
| Align Technology |
| Marathon Petroleum |
Align Technology and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Marathon Petroleum
The main advantage of trading using opposite Align Technology and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology 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.| Align Technology vs. Arrow Electronics, | Align Technology vs. STMicroelectronics NV | Align Technology vs. Universal Health Services, | Align Technology vs. Elevance Health, |
| Marathon Petroleum vs. METISA Metalrgica Timboense | Marathon Petroleum vs. Unity Software | Marathon Petroleum vs. CVS Health | Marathon Petroleum vs. Guidewire Software, |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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