Correlation Between Marathon Petroleum and Icahn Enterprises
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Icahn Enterprises 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 Icahn Enterprises 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 Icahn Enterprises LP, you can compare the effects of market volatilities on Marathon Petroleum and Icahn Enterprises 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 Icahn Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Icahn Enterprises.
Diversification Opportunities for Marathon Petroleum and Icahn Enterprises
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Marathon and Icahn is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn Enterprises 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 Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Icahn Enterprises go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Icahn Enterprises
Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 0.45 times more return on investment than Icahn Enterprises. However, Marathon Petroleum Corp is 2.22 times less risky than Icahn Enterprises. It trades about 0.25 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about -0.16 per unit of risk. If you would invest 14,393 in Marathon Petroleum Corp on August 31, 2024 and sell it today you would earn a total of 1,143 from holding Marathon Petroleum Corp or generate 7.94% 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. Icahn Enterprises LP
Performance |
| Timeline |
| Marathon Petroleum Corp |
| Icahn Enterprises |
Marathon Petroleum and Icahn Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Icahn Enterprises
The main advantage of trading using opposite Marathon Petroleum and Icahn Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Icahn Enterprises 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 Icahn Enterprises will offset losses from the drop in Icahn Enterprises' long position.| Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. HF Sinclair Corp | Marathon Petroleum vs. PBF Energy | Marathon Petroleum vs. Sunoco LP |
| Icahn Enterprises vs. Delek Energy | Icahn Enterprises vs. PBF Energy | Icahn Enterprises vs. HF Sinclair Corp | Icahn Enterprises vs. Delek Logistics Partners |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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