Correlation Between CVR Energy and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Marathon Petroleum Corp, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Marathon Petroleum.
Diversification Opportunities for CVR Energy and Marathon Petroleum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVR and Marathon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy 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 CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Marathon Petroleum go up and down completely randomly.
Pair Corralation between CVR Energy and Marathon Petroleum
Considering the 90-day investment horizon CVR Energy is expected to under-perform the Marathon Petroleum. In addition to that, CVR Energy is 1.56 times more volatile than Marathon Petroleum Corp. It trades about -0.05 of its total potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.03 per unit of volatility. If you would invest 14,621 in Marathon Petroleum Corp on August 26, 2024 and sell it today you would earn a total of 1,227 from holding Marathon Petroleum Corp or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVR Energy vs. Marathon Petroleum Corp
Performance |
| Timeline |
| CVR Energy |
| Marathon Petroleum Corp |
CVR Energy and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Marathon Petroleum
The main advantage of trading using opposite CVR Energy and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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.| CVR Energy vs. Delek Logistics Partners | CVR Energy vs. PBF Energy | CVR Energy vs. HF Sinclair Corp | CVR Energy vs. Par Pacific Holdings |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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