Correlation Between Crossamerica Partners and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Crossamerica Partners 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 Crossamerica Partners and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crossamerica Partners LP and Marathon Petroleum Corp, you can compare the effects of market volatilities on Crossamerica Partners 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 Crossamerica Partners with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crossamerica Partners and Marathon Petroleum.
Diversification Opportunities for Crossamerica Partners and Marathon Petroleum
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crossamerica and Marathon is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP 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 Crossamerica Partners 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 Crossamerica Partners LP 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 Crossamerica Partners i.e., Crossamerica Partners and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Crossamerica Partners and Marathon Petroleum
Given the investment horizon of 90 days Crossamerica Partners is expected to generate 1.14 times less return on investment than Marathon Petroleum. But when comparing it to its historical volatility, Crossamerica Partners LP is 2.25 times less risky than Marathon Petroleum. It trades about 0.1 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,270 in Marathon Petroleum Corp on November 18, 2024 and sell it today you would earn a total of 336.00 from holding Marathon Petroleum Corp or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crossamerica Partners LP vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Crossamerica Partners |
| Marathon Petroleum Corp |
Crossamerica Partners and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crossamerica Partners and Marathon Petroleum
The main advantage of trading using opposite Crossamerica Partners and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crossamerica Partners 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.| Crossamerica Partners vs. Delek Energy | Crossamerica Partners vs. Sunoco LP | Crossamerica Partners vs. CVR Energy | Crossamerica Partners vs. Phillips 66 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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