Correlation Between Marathon Petroleum and Refinaria
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Refinaria 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 Refinaria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Petroleum and Refinaria de Petrleos, you can compare the effects of market volatilities on Marathon Petroleum and Refinaria 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 Refinaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Refinaria.
Diversification Opportunities for Marathon Petroleum and Refinaria
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marathon and Refinaria is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos 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 Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Refinaria go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Refinaria
Assuming the 90 days trading horizon Marathon Petroleum is expected to generate 0.41 times more return on investment than Refinaria. However, Marathon Petroleum is 2.44 times less risky than Refinaria. It trades about -0.08 of its potential returns per unit of risk. Refinaria de Petrleos is currently generating about -0.06 per unit of risk. If you would invest 97,660 in Marathon Petroleum on September 12, 2024 and sell it today you would lose (6,427) from holding Marathon Petroleum or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Marathon Petroleum vs. Refinaria de Petrleos
Performance |
| Timeline |
| Marathon Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Refinaria de Petrleos |
Marathon Petroleum and Refinaria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Refinaria
The main advantage of trading using opposite Marathon Petroleum and Refinaria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Refinaria 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 Refinaria will offset losses from the drop in Refinaria's long position.| Marathon Petroleum vs. Healthpeak Properties | Marathon Petroleum vs. Spotify Technology SA | Marathon Petroleum vs. HDFC Bank Limited | Marathon Petroleum vs. GP Investments |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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