Correlation Between Microsoft and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Microsoft and Marathon Petroleum 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 Microsoft and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Marathon Petroleum, you can compare the effects of market volatilities on Microsoft and Marathon Petroleum 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 Microsoft with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Marathon Petroleum.
Diversification Opportunities for Microsoft and Marathon Petroleum
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Marathon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and Microsoft 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 Microsoft are associated (or correlated) with Marathon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Petroleum has no effect on the direction of Microsoft i.e., Microsoft and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Microsoft and Marathon Petroleum
Assuming the 90 days trading horizon Microsoft is expected to generate 3.98 times less return on investment than Marathon Petroleum. But when comparing it to its historical volatility, Microsoft is 1.26 times less risky than Marathon Petroleum. It trades about 0.04 of its potential returns per unit of risk. Marathon Petroleum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,710 in Marathon Petroleum on August 30, 2024 and sell it today you would earn a total of 960.00 from holding Marathon Petroleum or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Marathon Petroleum
Performance |
| Timeline |
| Microsoft |
| Marathon Petroleum |
Microsoft and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Marathon Petroleum
The main advantage of trading using opposite Microsoft and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Marathon Petroleum 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 Marathon Petroleum will offset losses from the drop in Marathon Petroleum's long position.| Microsoft vs. Beyond Meat | Microsoft vs. Unity Software | Microsoft vs. MAGIC SOFTWARE ENTR | Microsoft vs. AUSTEVOLL SEAFOOD |
| Marathon Petroleum vs. Jacquet Metal Service | Marathon Petroleum vs. Zijin Mining Group | Marathon Petroleum vs. MCEWEN MINING INC | Marathon Petroleum vs. SALESFORCE INC CDR |
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..
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |