Correlation Between Marathon Petroleum and Ultrapar Participacoes
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Ultrapar Participacoes 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 Ultrapar Participacoes 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 Ultrapar Participacoes SA, you can compare the effects of market volatilities on Marathon Petroleum and Ultrapar Participacoes 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 Ultrapar Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Ultrapar Participacoes.
Diversification Opportunities for Marathon Petroleum and Ultrapar Participacoes
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marathon and Ultrapar is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes 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 Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Ultrapar Participacoes go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Ultrapar Participacoes
Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 0.82 times more return on investment than Ultrapar Participacoes. However, Marathon Petroleum Corp is 1.22 times less risky than Ultrapar Participacoes. It trades about 0.04 of its potential returns per unit of risk. Ultrapar Participacoes SA is currently generating about 0.02 per unit of risk. If you would invest 11,854 in Marathon Petroleum Corp on November 9, 2024 and sell it today you would earn a total of 3,339 from holding Marathon Petroleum Corp or generate 28.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marathon Petroleum Corp vs. Ultrapar Participacoes SA
Performance |
| Timeline |
| Marathon Petroleum Corp |
| Ultrapar Participacoes |
Marathon Petroleum and Ultrapar Participacoes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Ultrapar Participacoes
The main advantage of trading using opposite Marathon Petroleum and Ultrapar Participacoes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Ultrapar Participacoes 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 Ultrapar Participacoes will offset losses from the drop in Ultrapar Participacoes' long position.| Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. HF Sinclair Corp | Marathon Petroleum vs. PBF Energy | Marathon Petroleum vs. Sunoco LP |
| Ultrapar Participacoes vs. Star Gas Partners | Ultrapar Participacoes vs. Par Pacific Holdings | Ultrapar Participacoes vs. Delek Energy | Ultrapar Participacoes vs. Crossamerica Partners LP |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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