Correlation Between Phillips and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Phillips 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 Phillips and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Marathon Petroleum Corp, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Marathon Petroleum.
Diversification Opportunities for Phillips and Marathon Petroleum
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Phillips and Marathon is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 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 Phillips 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 Phillips 66 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 Phillips i.e., Phillips and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Phillips and Marathon Petroleum
Considering the 90-day investment horizon Phillips is expected to generate 2.67 times less return on investment than Marathon Petroleum. But when comparing it to its historical volatility, Phillips 66 is 1.09 times less risky than Marathon Petroleum. It trades about 0.02 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,231 in Marathon Petroleum Corp on November 1, 2024 and sell it today you would earn a total of 761.00 from holding Marathon Petroleum Corp or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phillips 66 vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Phillips 66 |
| Marathon Petroleum Corp |
Phillips and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and Marathon Petroleum
The main advantage of trading using opposite Phillips and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |