Correlation Between Marathon Petroleum and Crossamerica Partners
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Crossamerica Partners 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 Crossamerica Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Petroleum Corp and Crossamerica Partners LP, you can compare the effects of market volatilities on Marathon Petroleum and Crossamerica Partners 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 Crossamerica Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Crossamerica Partners.
Diversification Opportunities for Marathon Petroleum and Crossamerica Partners
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Marathon and Crossamerica is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners 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 Corp are associated (or correlated) with Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Crossamerica Partners go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Crossamerica Partners
Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 1.45 times more return on investment than Crossamerica Partners. However, Marathon Petroleum is 1.45 times more volatile than Crossamerica Partners LP. It trades about 0.69 of its potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.33 per unit of risk. If you would invest 13,165 in Marathon Petroleum Corp on October 20, 2024 and sell it today you would earn a total of 2,105 from holding Marathon Petroleum Corp or generate 15.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Marathon Petroleum Corp vs. Crossamerica Partners LP
Performance |
Timeline |
Marathon Petroleum Corp |
Crossamerica Partners |
Marathon Petroleum and Crossamerica Partners Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marathon Petroleum and Crossamerica Partners
The main advantage of trading using opposite Marathon Petroleum and Crossamerica Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Crossamerica Partners 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 Crossamerica Partners will offset losses from the drop in Crossamerica Partners' long position.Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. HF Sinclair Corp | Marathon Petroleum vs. PBF Energy | Marathon Petroleum vs. Sunoco 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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