Correlation Between Charter Communications and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Marathon Petroleum, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Marathon Petroleum.
Diversification Opportunities for Charter Communications and Marathon Petroleum
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Charter and Marathon is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Charter Communications and Marathon Petroleum
Assuming the 90 days trading horizon Charter Communications is expected to generate 2.21 times more return on investment than Marathon Petroleum. However, Charter Communications is 2.21 times more volatile than Marathon Petroleum. It trades about 0.14 of its potential returns per unit of risk. Marathon Petroleum is currently generating about -0.08 per unit of risk. If you would invest 3,229 in Charter Communications on September 2, 2024 and sell it today you would earn a total of 753.00 from holding Charter Communications or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Marathon Petroleum
Performance |
| Timeline |
| Charter Communications |
| Marathon Petroleum |
Charter Communications and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Marathon Petroleum
The main advantage of trading using opposite Charter Communications and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Intelbras SA | Charter Communications vs. Neogrid Participaes SA | Charter Communications vs. Mliuz SA | Charter Communications vs. Locaweb Servios de |
| Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. Cosan SA | Marathon Petroleum vs. Refinaria de Petrleos |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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