Correlation Between Marathon Petroleum and PTL

Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and PTL 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 PTL 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 PTL LTD Ordinary, you can compare the effects of market volatilities on Marathon Petroleum and PTL 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 PTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and PTL.

Diversification Opportunities for Marathon Petroleum and PTL

-0.61

Correlation Coefficient

Marathon Petroleum  PTL

Excellent diversification

The 3 months correlation between Marathon and PTL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and PTL LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTL LTD Ordinary 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 PTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTL LTD Ordinary has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and PTL go up and down completely randomly.

Pair Corralation between Marathon Petroleum and PTL

Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 0.06 times more return on investment than PTL. However, Marathon Petroleum Corp is 18.13 times less risky than PTL. It trades about 0.38 of its potential returns per unit of risk. PTL LTD Ordinary is currently generating about -0.06 per unit of risk. If you would invest  13,398  in Marathon Petroleum Corp on October 24, 2024 and sell it today you would earn a total of  1,363  from holding Marathon Petroleum Corp or generate 10.17% return on investment over 90 days.

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

Marathon Petroleum Corp  vs.  PTL LTD Ordinary

Marathon Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Marathon Petroleum is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PTL LTD Ordinary

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PTL LTD Ordinary are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, PTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Petroleum and PTL

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

The idea behind Marathon Petroleum Corp and PTL LTD Ordinary 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.