Correlation Between Ampol and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Ampol 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 Ampol and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampol Ltd ADR and Marathon Petroleum Corp, you can compare the effects of market volatilities on Ampol 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 Ampol with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampol and Marathon Petroleum.
Diversification Opportunities for Ampol and Marathon Petroleum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ampol and Marathon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ampol Ltd ADR 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 Ampol 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 Ampol Ltd ADR 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 Ampol i.e., Ampol and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Ampol and Marathon Petroleum
Assuming the 90 days horizon Ampol Ltd ADR is expected to under-perform the Marathon Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ampol Ltd ADR is 1.08 times less risky than Marathon Petroleum. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Marathon Petroleum Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 17,209 in Marathon Petroleum Corp on September 3, 2024 and sell it today you would lose (1,468) from holding Marathon Petroleum Corp or give up 8.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ampol Ltd ADR vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Ampol Ltd ADR |
| Marathon Petroleum Corp |
Ampol and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampol and Marathon Petroleum
The main advantage of trading using opposite Ampol and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampol 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.| Ampol vs. Ultrapar Participacoes SA | Ampol vs. Sunoco LP | Ampol vs. HF Sinclair Corp | Ampol vs. Delek Energy |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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