Correlation Between Marathon Petroleum and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Entravision Communications 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 Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marathon Petroleum and Entravision Communications, you can compare the effects of market volatilities on Marathon Petroleum and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Entravision Communications.
Diversification Opportunities for Marathon Petroleum and Entravision Communications
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Marathon and Entravision is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Entravision Communications go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Entravision Communications
Assuming the 90 days trading horizon Marathon Petroleum is expected to generate 0.57 times more return on investment than Entravision Communications. However, Marathon Petroleum is 1.76 times less risky than Entravision Communications. It trades about 0.24 of its potential returns per unit of risk. Entravision Communications is currently generating about 0.09 per unit of risk. If you would invest 13,118 in Marathon Petroleum on September 2, 2024 and sell it today you would earn a total of 1,582 from holding Marathon Petroleum or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marathon Petroleum vs. Entravision Communications
Performance |
| Timeline |
| Marathon Petroleum |
| Entravision Communications |
Marathon Petroleum and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Entravision Communications
The main advantage of trading using opposite Marathon Petroleum and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Marathon Petroleum vs. Entravision Communications | Marathon Petroleum vs. Ribbon Communications | Marathon Petroleum vs. Charter Communications | Marathon Petroleum vs. SK TELECOM TDADR |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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