Correlation Between Energy Transfer and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Energy Transfer 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 Energy Transfer and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Transfer LP and Marathon Petroleum Corp, you can compare the effects of market volatilities on Energy Transfer 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 Energy Transfer with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Marathon Petroleum.
Diversification Opportunities for Energy Transfer and Marathon Petroleum
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Marathon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer 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 Energy Transfer 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 Energy Transfer 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 Energy Transfer i.e., Energy Transfer and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Energy Transfer and Marathon Petroleum
Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.61 times more return on investment than Marathon Petroleum. However, Energy Transfer LP is 1.65 times less risky than Marathon Petroleum. It trades about 0.18 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about -0.04 per unit of risk. If you would invest 1,490 in Energy Transfer LP on August 24, 2024 and sell it today you would earn a total of 407.00 from holding Energy Transfer LP or generate 27.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Transfer LP vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Energy Transfer LP |
| Marathon Petroleum Corp |
Energy Transfer and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Marathon Petroleum
The main advantage of trading using opposite Energy Transfer and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer 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.| Energy Transfer vs. Western Midstream Partners | Energy Transfer vs. MPLX LP | Energy Transfer vs. Hess Midstream Partners | Energy Transfer vs. Plains All American |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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