Correlation Between Apple and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Marathon Petroleum, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Marathon Petroleum.
Diversification Opportunities for Apple and Marathon Petroleum
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and Marathon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and Apple 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 Apple Inc 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 Apple i.e., Apple and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Apple and Marathon Petroleum
Assuming the 90 days trading horizon Apple is expected to generate 1.5 times less return on investment than Marathon Petroleum. But when comparing it to its historical volatility, Apple Inc is 1.32 times less risky than Marathon Petroleum. It trades about 0.07 of its potential returns per unit of risk. Marathon Petroleum is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,278 in Marathon Petroleum on August 27, 2024 and sell it today you would earn a total of 5,976 from holding Marathon Petroleum or generate 64.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Marathon Petroleum
Performance |
| Timeline |
| Apple Inc |
| Marathon Petroleum |
Apple and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Marathon Petroleum
The main advantage of trading using opposite Apple and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. LION ONE METALS | Apple vs. GRIFFIN MINING LTD | Apple vs. EAT WELL INVESTMENT | Apple vs. Gladstone Investment |
| Marathon Petroleum vs. Apple Inc | Marathon Petroleum vs. Apple Inc | Marathon Petroleum vs. Apple Inc | Marathon Petroleum vs. Apple Inc |
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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