Correlation Between Marathon Petroleum and Refinaria

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

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

Diversification Opportunities for Marathon Petroleum and Refinaria

0.55

Correlation Coefficient

Marathon Petroleum  Refinaria

Very weak diversification

The 3 months correlation between Marathon and Refinaria is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos and Marathon Petroleum 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 Marathon Petroleum are associated (or correlated) with Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Refinaria go up and down completely randomly.

Pair Corralation between Marathon Petroleum and Refinaria

Assuming the 90 days trading horizon Marathon Petroleum is expected to generate 1.12 times less return on investment than Refinaria. But when comparing it to its historical volatility, Marathon Petroleum is 1.41 times less risky than Refinaria. It trades about 0.06 of its potential returns per unit of risk. Refinaria de Petrleos is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  161.00  in Refinaria de Petrleos on September 29, 2024 and sell it today you would earn a total of  95.00  from holding Refinaria de Petrleos or generate 59.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.55%
Values	Daily Returns

Marathon Petroleum  vs.  Refinaria de Petrleos

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refinaria de Petrleos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Marathon Petroleum and Refinaria

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

The idea behind Marathon Petroleum and Refinaria de Petrleos 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.