Correlation Between Futuretech and MARATHON

Can any of the company-specific risk be diversified away by investing in both Futuretech and MARATHON 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 Futuretech and MARATHON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Futuretech II Acquisition and MARATHON PETROLEUM P, you can compare the effects of market volatilities on Futuretech and MARATHON 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 Futuretech with a short position of MARATHON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuretech and MARATHON.

Diversification Opportunities for Futuretech and MARATHON

-0.42

Correlation Coefficient

Futuretech  MARATHON

Very good diversification

The 3 months correlation between Futuretech and MARATHON is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II Acquisition and MARATHON PETROLEUM P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARATHON PETROLEUM and Futuretech 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 Futuretech II Acquisition are associated (or correlated) with MARATHON. 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 Futuretech i.e., Futuretech and MARATHON go up and down completely randomly.

Pair Corralation between Futuretech and MARATHON

Given the investment horizon of 90 days Futuretech II Acquisition is expected to generate 10.51 times more return on investment than MARATHON. However, Futuretech is 10.51 times more volatile than MARATHON PETROLEUM P. It trades about 0.07 of its potential returns per unit of risk. MARATHON PETROLEUM P is currently generating about -0.1 per unit of risk. If you would invest  1,121  in Futuretech II Acquisition on October 10, 2024 and sell it today you would earn a total of  74.00  from holding Futuretech II Acquisition or generate 6.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Futuretech II Acquisition  vs.  MARATHON PETROLEUM P

Futuretech II Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Futuretech II Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MARATHON PETROLEUM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARATHON PETROLEUM P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MARATHON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Futuretech and MARATHON

The main advantage of trading using opposite Futuretech and MARATHON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuretech position performs unexpectedly, MARATHON 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 will offset losses from the drop in MARATHON's long position.

The idea behind Futuretech II Acquisition and MARATHON PETROLEUM P 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.