Correlation Between TRAVEL LEISURE and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both TRAVEL LEISURE 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 TRAVEL LEISURE and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and Marathon Petroleum, you can compare the effects of market volatilities on TRAVEL LEISURE 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 TRAVEL LEISURE with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL LEISURE and Marathon Petroleum.
Diversification Opportunities for TRAVEL LEISURE and Marathon Petroleum
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between TRAVEL and Marathon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and TRAVEL LEISURE 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 TRAVEL LEISURE DL 01 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 has no effect on the direction of TRAVEL LEISURE i.e., TRAVEL LEISURE and Marathon Petroleum go up and down completely randomly.
Pair Corralation between TRAVEL LEISURE and Marathon Petroleum
Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 1.05 times more return on investment than Marathon Petroleum. However, TRAVEL LEISURE is 1.05 times more volatile than Marathon Petroleum. It trades about 0.41 of its potential returns per unit of risk. Marathon Petroleum is currently generating about 0.22 per unit of risk. If you would invest 4,440 in TRAVEL LEISURE DL 01 on August 30, 2024 and sell it today you would earn a total of 810.00 from holding TRAVEL LEISURE DL 01 or generate 18.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAVEL LEISURE DL 01 vs. Marathon Petroleum
Performance |
| Timeline |
| TRAVEL LEISURE DL |
| Marathon Petroleum |
TRAVEL LEISURE and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAVEL LEISURE and Marathon Petroleum
The main advantage of trading using opposite TRAVEL LEISURE and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL LEISURE 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 TRAVEL LEISURE DL 01 and Marathon Petroleum 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.| Marathon Petroleum vs. TRAVEL LEISURE DL 01 | Marathon Petroleum vs. MACOM Technology Solutions | Marathon Petroleum vs. Vishay Intertechnology | Marathon Petroleum vs. Columbia Sportswear |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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