Correlation Between Imperial Petroleum and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Imperial Petroleum 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 Imperial Petroleum and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Petroleum Preferred and Marathon Petroleum Corp, you can compare the effects of market volatilities on Imperial Petroleum 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 Imperial Petroleum with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Marathon Petroleum.
Diversification Opportunities for Imperial Petroleum and Marathon Petroleum
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Imperial and Marathon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum Preferred 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 Imperial Petroleum 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 Imperial Petroleum Preferred 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 Imperial Petroleum i.e., Imperial Petroleum and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Imperial Petroleum and Marathon Petroleum
Assuming the 90 days horizon Imperial Petroleum is expected to generate 3.44 times less return on investment than Marathon Petroleum. But when comparing it to its historical volatility, Imperial Petroleum Preferred is 2.44 times less risky than Marathon Petroleum. It trades about 0.11 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 15,020 in Marathon Petroleum Corp on August 27, 2024 and sell it today you would earn a total of 828.00 from holding Marathon Petroleum Corp or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Petroleum Preferred vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Imperial Petroleum |
| Marathon Petroleum Corp |
Imperial Petroleum and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Petroleum and Marathon Petroleum
The main advantage of trading using opposite Imperial Petroleum and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Petroleum 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.| Imperial Petroleum vs. Imperial Petroleum | Imperial Petroleum vs. Dynagas LNG Partners | Imperial Petroleum vs. GasLog Partners LP | Imperial Petroleum vs. GasLog Partners LP |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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