Correlation Between Par Pacific and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Par Pacific 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 Par Pacific and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Par Pacific Holdings and Marathon Petroleum Corp, you can compare the effects of market volatilities on Par Pacific 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 Par Pacific with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Par Pacific and Marathon Petroleum.
Diversification Opportunities for Par Pacific and Marathon Petroleum
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Par and Marathon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Par Pacific Holdings 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 Par Pacific 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 Par Pacific Holdings 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 Par Pacific i.e., Par Pacific and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Par Pacific and Marathon Petroleum
Given the investment horizon of 90 days Par Pacific Holdings is expected to under-perform the Marathon Petroleum. In addition to that, Par Pacific is 1.37 times more volatile than Marathon Petroleum Corp. It trades about -0.09 of its total potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.03 per unit of volatility. If you would invest 14,621 in Marathon Petroleum Corp on August 26, 2024 and sell it today you would earn a total of 1,227 from holding Marathon Petroleum Corp or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Par Pacific Holdings vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Par Pacific Holdings |
| Marathon Petroleum Corp |
Par Pacific and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Par Pacific and Marathon Petroleum
The main advantage of trading using opposite Par Pacific and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Par Pacific 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.| Par Pacific vs. Delek Energy | Par Pacific vs. Crossamerica Partners LP | Par Pacific vs. Valvoline | Par Pacific vs. Star Gas Partners |
| Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. HF Sinclair Corp | Marathon Petroleum vs. PBF Energy | Marathon Petroleum vs. Sunoco LP |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |