Correlation Between Marathon Petroleum and Phillips
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Phillips 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 Marathon Petroleum and Phillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Petroleum and Phillips 66, you can compare the effects of market volatilities on Marathon Petroleum and Phillips 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 Marathon Petroleum with a short position of Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Phillips.
Diversification Opportunities for Marathon Petroleum and Phillips
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marathon and Phillips is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Marathon 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 Marathon Petroleum are associated (or correlated) with Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Phillips go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Phillips
Assuming the 90 days trading horizon Marathon Petroleum is expected to generate 5.35 times less return on investment than Phillips. But when comparing it to its historical volatility, Marathon Petroleum is 1.05 times less risky than Phillips. It trades about 0.01 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 36,073 in Phillips 66 on September 3, 2024 and sell it today you would earn a total of 3,767 from holding Phillips 66 or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Marathon Petroleum vs. Phillips 66
Performance |
| Timeline |
| Marathon Petroleum |
| Phillips 66 |
Marathon Petroleum and Phillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Phillips
The main advantage of trading using opposite Marathon Petroleum and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.| Marathon Petroleum vs. Valero Energy | 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.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |