Correlation Between MAHLE Metal and Marathon Petroleum

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

By analyzing existing cross correlation between MAHLE Metal Leve and Marathon Petroleum, you can compare the effects of market volatilities on MAHLE Metal 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 MAHLE Metal with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Marathon Petroleum.

Diversification Opportunities for MAHLE Metal and Marathon Petroleum

0.22

Correlation Coefficient

MAHLE Metal  Marathon Petroleum

Modest diversification

The 3 months correlation between MAHLE and Marathon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and MAHLE Metal 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 MAHLE Metal Leve 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 MAHLE Metal i.e., MAHLE Metal and Marathon Petroleum go up and down completely randomly.

Pair Corralation between MAHLE Metal and Marathon Petroleum

Assuming the 90 days trading horizon MAHLE Metal Leve is expected to generate 1.2 times more return on investment than Marathon Petroleum. However, MAHLE Metal is 1.2 times more volatile than Marathon Petroleum. It trades about 0.15 of its potential returns per unit of risk. Marathon Petroleum is currently generating about -0.31 per unit of risk. If you would invest  2,626  in MAHLE Metal Leve on October 4, 2024 and sell it today you would earn a total of  120.00  from holding MAHLE Metal Leve or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MAHLE Metal Leve  vs.  Marathon Petroleum

MAHLE Metal Leve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAHLE Metal Leve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Marathon Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MAHLE Metal and Marathon Petroleum

The main advantage of trading using opposite MAHLE Metal and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal 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 MAHLE Metal Leve 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.