Correlation Between NESTE OYJ and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both NESTE OYJ 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 NESTE OYJ and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NESTE OYJ UNSPADR and Marathon Petroleum Corp, you can compare the effects of market volatilities on NESTE OYJ 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 NESTE OYJ with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and Marathon Petroleum.
Diversification Opportunities for NESTE OYJ and Marathon Petroleum
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NESTE and Marathon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and Marathon Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum Corp and NESTE OYJ 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 NESTE OYJ UNSPADR 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 Corp has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and Marathon Petroleum go up and down completely randomly.
Pair Corralation between NESTE OYJ and Marathon Petroleum
Assuming the 90 days trading horizon NESTE OYJ UNSPADR is expected to generate 1.56 times more return on investment than Marathon Petroleum. However, NESTE OYJ is 1.56 times more volatile than Marathon Petroleum Corp. It trades about -0.09 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about -0.18 per unit of risk. If you would invest 635.00 in NESTE OYJ UNSPADR on October 10, 2024 and sell it today you would lose (35.00) from holding NESTE OYJ UNSPADR or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NESTE OYJ UNSPADR vs. Marathon Petroleum Corp
Performance |
| Timeline |
| NESTE OYJ UNSPADR |
| Marathon Petroleum Corp |
NESTE OYJ and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NESTE OYJ and Marathon Petroleum
The main advantage of trading using opposite NESTE OYJ and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ 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.| NESTE OYJ vs. Gaztransport Technigaz SA | NESTE OYJ vs. CARSALESCOM | NESTE OYJ vs. ZhongAn Online P | NESTE OYJ vs. Transport International Holdings |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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