Correlation Between Singapore ReinsuranceLimit and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Singapore ReinsuranceLimit 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 Singapore ReinsuranceLimit and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Reinsurance and Marathon Petroleum Corp, you can compare the effects of market volatilities on Singapore ReinsuranceLimit 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 Singapore ReinsuranceLimit with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore ReinsuranceLimit and Marathon Petroleum.
Diversification Opportunities for Singapore ReinsuranceLimit and Marathon Petroleum
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and Marathon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance 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 Singapore ReinsuranceLimit 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 Singapore Reinsurance 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 Singapore ReinsuranceLimit i.e., Singapore ReinsuranceLimit and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Singapore ReinsuranceLimit and Marathon Petroleum
Assuming the 90 days trading horizon Singapore ReinsuranceLimit is expected to generate 1.88 times less return on investment than Marathon Petroleum. In addition to that, Singapore ReinsuranceLimit is 1.44 times more volatile than Marathon Petroleum Corp. It trades about 0.02 of its total potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.05 per unit of volatility. If you would invest 9,834 in Marathon Petroleum Corp on September 3, 2024 and sell it today you would earn a total of 4,822 from holding Marathon Petroleum Corp or generate 49.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Reinsurance vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Singapore ReinsuranceLimit |
| Marathon Petroleum Corp |
Singapore ReinsuranceLimit and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore ReinsuranceLimit and Marathon Petroleum
The main advantage of trading using opposite Singapore ReinsuranceLimit and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore ReinsuranceLimit 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.The idea behind Singapore Reinsurance and Marathon Petroleum Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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