Correlation Between Reliance Industries and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Reliance Industries 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 Reliance Industries and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Industries Limited and Marathon Petroleum Corp, you can compare the effects of market volatilities on Reliance Industries 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 Reliance Industries with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Marathon Petroleum.
Diversification Opportunities for Reliance Industries and Marathon Petroleum
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Reliance and Marathon is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited 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 Reliance Industries 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 Reliance Industries Limited 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 Reliance Industries i.e., Reliance Industries and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Reliance Industries and Marathon Petroleum
Assuming the 90 days horizon Reliance Industries is expected to generate 2.43 times less return on investment than Marathon Petroleum. But when comparing it to its historical volatility, Reliance Industries Limited is 1.29 times less risky than Marathon Petroleum. It trades about 0.01 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,827 in Marathon Petroleum Corp on September 12, 2024 and sell it today you would earn a total of 1,459 from holding Marathon Petroleum Corp or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Industries Limited vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Reliance Industries |
| Marathon Petroleum Corp |
Reliance Industries and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Industries and Marathon Petroleum
The main advantage of trading using opposite Reliance Industries and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Industries 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.| Reliance Industries vs. Tencent Holdings | Reliance Industries vs. Thermo Fisher Scientific | Reliance Industries vs. Exxon Mobil | Reliance Industries vs. SoftBank Group Corp |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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