Correlation Between Marathon Petroleum and Cosan SA
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Cosan SA 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 Cosan SA 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 Cosan SA ADR, you can compare the effects of market volatilities on Marathon Petroleum and Cosan SA 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 Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Cosan SA.
Diversification Opportunities for Marathon Petroleum and Cosan SA
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marathon and Cosan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Cosan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA ADR 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 Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA ADR has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Cosan SA go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Cosan SA
Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 0.73 times more return on investment than Cosan SA. However, Marathon Petroleum Corp is 1.37 times less risky than Cosan SA. It trades about 0.04 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.21 per unit of risk. If you would invest 15,733 in Marathon Petroleum Corp on August 23, 2024 and sell it today you would earn a total of 196.00 from holding Marathon Petroleum Corp or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marathon Petroleum Corp vs. Cosan SA ADR
Performance |
| Timeline |
| Marathon Petroleum Corp |
| Cosan SA ADR |
Marathon Petroleum and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Cosan SA
The main advantage of trading using opposite Marathon Petroleum and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Cosan SA 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 Cosan SA will offset losses from the drop in Cosan SA's long position.| Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. HF Sinclair Corp | Marathon Petroleum vs. PBF Energy | Marathon Petroleum vs. Sunoco LP |
| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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