Correlation Between Marathon Petroleum and DCC PLC
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and DCC PLC 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 DCC PLC 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 DCC PLC ADR, you can compare the effects of market volatilities on Marathon Petroleum and DCC PLC 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 DCC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and DCC PLC.
Diversification Opportunities for Marathon Petroleum and DCC PLC
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Marathon and DCC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and DCC PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCC PLC 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 DCC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCC PLC ADR has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and DCC PLC go up and down completely randomly.
Pair Corralation between Marathon Petroleum and DCC PLC
Considering the 90-day investment horizon Marathon Petroleum Corp is expected to under-perform the DCC PLC. In addition to that, Marathon Petroleum is 10.7 times more volatile than DCC PLC ADR. It trades about -0.04 of its total potential returns per unit of risk. DCC PLC ADR is currently generating about 0.09 per unit of volatility. If you would invest 2,213 in DCC PLC ADR on September 5, 2024 and sell it today you would earn a total of 42.00 from holding DCC PLC ADR or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marathon Petroleum Corp vs. DCC PLC ADR
Performance |
| Timeline |
| Marathon Petroleum Corp |
| DCC PLC ADR |
Marathon Petroleum and DCC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and DCC PLC
The main advantage of trading using opposite Marathon Petroleum and DCC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, DCC PLC 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 DCC PLC will offset losses from the drop in DCC PLC's long position.| Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. HF Sinclair Corp | Marathon Petroleum vs. PBF Energy | Marathon Petroleum vs. Sunoco LP |
| DCC PLC vs. Ultrapar Participacoes SA | DCC PLC vs. Sunoco LP | DCC PLC vs. HF Sinclair Corp | DCC PLC vs. Delek Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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