Correlation Between Marathon Petroleum and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and NESTE OYJ 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 NESTE OYJ 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 NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Marathon Petroleum and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and NESTE OYJ.
Diversification Opportunities for Marathon Petroleum and NESTE OYJ
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marathon and NESTE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and NESTE OYJ go up and down completely randomly.
Pair Corralation between Marathon Petroleum and NESTE OYJ
Assuming the 90 days horizon Marathon Petroleum Corp is expected to generate 0.71 times more return on investment than NESTE OYJ. However, Marathon Petroleum Corp is 1.4 times less risky than NESTE OYJ. It trades about 0.16 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.02 per unit of risk. If you would invest 13,877 in Marathon Petroleum Corp on August 29, 2024 and sell it today you would earn a total of 1,037 from holding Marathon Petroleum Corp or generate 7.47% 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. NESTE OYJ UNSPADR
Performance |
| Timeline |
| Marathon Petroleum Corp |
| NESTE OYJ UNSPADR |
Marathon Petroleum and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and NESTE OYJ
The main advantage of trading using opposite Marathon Petroleum and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| Marathon Petroleum vs. Neste Oyj | Marathon Petroleum vs. Superior Plus Corp | Marathon Petroleum vs. NMI Holdings | Marathon Petroleum vs. Origin Agritech |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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