Correlation Between INFORMATION SVC and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC 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 INFORMATION SVC and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Marathon Petroleum Corp, you can compare the effects of market volatilities on INFORMATION SVC 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 INFORMATION SVC with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Marathon Petroleum.
Diversification Opportunities for INFORMATION SVC and Marathon Petroleum
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INFORMATION and Marathon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP 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 INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and Marathon Petroleum go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Marathon Petroleum
Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 1.09 times more return on investment than Marathon Petroleum. However, INFORMATION SVC is 1.09 times more volatile than Marathon Petroleum Corp. It trades about 0.29 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.02 per unit of risk. If you would invest 306.00 in INFORMATION SVC GRP on September 12, 2024 and sell it today you would earn a total of 40.00 from holding INFORMATION SVC GRP or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFORMATION SVC GRP vs. Marathon Petroleum Corp
Performance |
| Timeline |
| INFORMATION SVC GRP |
| Marathon Petroleum Corp |
INFORMATION SVC and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and Marathon Petroleum
The main advantage of trading using opposite INFORMATION SVC and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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.| INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc | INFORMATION SVC vs. Apple Inc |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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