Correlation Between Marathon Petroleum and HF Sinclair

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

By analyzing existing cross correlation between Marathon Petroleum Corp and HF Sinclair Corp, you can compare the effects of market volatilities on Marathon Petroleum and HF Sinclair 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 HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and HF Sinclair.

Diversification Opportunities for Marathon Petroleum and HF Sinclair

0.64

Correlation Coefficient

Marathon Petroleum  HF Sinclair

Poor diversification

The 3 months correlation between Marathon and DINO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp 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 Corp are associated (or correlated) with HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and HF Sinclair go up and down completely randomly.

Pair Corralation between Marathon Petroleum and HF Sinclair

Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 0.89 times more return on investment than HF Sinclair. However, Marathon Petroleum Corp is 1.13 times less risky than HF Sinclair. It trades about 0.06 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about 0.0 per unit of risk. If you would invest  13,482  in Marathon Petroleum Corp on December 28, 2024 and sell it today you would earn a total of  928.00  from holding Marathon Petroleum Corp or generate 6.88% return on investment over 90 days.

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

Marathon Petroleum Corp  vs.  HF Sinclair Corp

Marathon Petroleum Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Petroleum Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Marathon Petroleum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HF Sinclair Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HF Sinclair is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marathon Petroleum and HF Sinclair

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

The idea behind Marathon Petroleum Corp and HF Sinclair Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.