Correlation Between Marathon Petroleum and Valero Energy
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Valero Energy 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 Valero Energy 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 Valero Energy, you can compare the effects of market volatilities on Marathon Petroleum and Valero Energy 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 Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Valero Energy.
Diversification Opportunities for Marathon Petroleum and Valero Energy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Marathon and Valero is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy 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 Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Valero Energy go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Valero Energy
Assuming the 90 days horizon Marathon Petroleum Corp is expected to under-perform the Valero Energy. In addition to that, Marathon Petroleum is 1.08 times more volatile than Valero Energy. It trades about -0.23 of its total potential returns per unit of risk. Valero Energy is currently generating about -0.16 per unit of volatility. If you would invest 12,826 in Valero Energy on December 10, 2024 and sell it today you would lose (1,052) from holding Valero Energy or give up 8.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marathon Petroleum Corp vs. Valero Energy
Performance |
| Timeline |
| Marathon Petroleum Corp |
| Valero Energy |
Marathon Petroleum and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Valero Energy
The main advantage of trading using opposite Marathon Petroleum and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Valero Energy 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 Valero Energy will offset losses from the drop in Valero Energy's long position.| Marathon Petroleum vs. Jacquet Metal Service | Marathon Petroleum vs. Samsung Electronics Co | Marathon Petroleum vs. Calibre Mining Corp | Marathon Petroleum vs. Schweizer Electronic AG |
| Valero Energy vs. Calibre Mining Corp | Valero Energy vs. Nomad Foods | Valero Energy vs. East Africa Metals | Valero Energy vs. GOLDQUEST MINING |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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