Correlation Between Par Pacific and MRC Global
Can any of the company-specific risk be diversified away by investing in both Par Pacific and MRC Global 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 MRC Global 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 MRC Global, you can compare the effects of market volatilities on Par Pacific and MRC Global 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 MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Par Pacific and MRC Global.
Diversification Opportunities for Par Pacific and MRC Global
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Par and MRC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Par Pacific Holdings and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Par Pacific i.e., Par Pacific and MRC Global go up and down completely randomly.
Pair Corralation between Par Pacific and MRC Global
Given the investment horizon of 90 days Par Pacific Holdings is expected to under-perform the MRC Global. But the stock apears to be less risky and, when comparing its historical volatility, Par Pacific Holdings is 1.01 times less risky than MRC Global. The stock trades about -0.02 of its potential returns per unit of risk. The MRC Global is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,315 in MRC Global on August 27, 2024 and sell it today you would earn a total of 91.00 from holding MRC Global or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Par Pacific Holdings vs. MRC Global
Performance |
| Timeline |
| Par Pacific Holdings |
| MRC Global |
Par Pacific and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Par Pacific and MRC Global
The main advantage of trading using opposite Par Pacific and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Par Pacific position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| Par Pacific vs. Delek Logistics Partners | Par Pacific vs. CVR Energy | Par Pacific vs. PBF Energy | Par Pacific vs. HF Sinclair Corp |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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