Correlation Between Pure Storage, and Marathon Petroleum

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

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

Diversification Opportunities for Pure Storage, and Marathon Petroleum

-0.31

Correlation Coefficient

Pure Storage,  Marathon Petroleum

Very good diversification

The 3 months correlation between Pure and Marathon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage, and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and Pure Storage, 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 Pure Storage, 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 Pure Storage, i.e., Pure Storage, and Marathon Petroleum go up and down completely randomly.

Pair Corralation between Pure Storage, and Marathon Petroleum

Assuming the 90 days trading horizon Pure Storage, is expected to generate 5.24 times more return on investment than Marathon Petroleum. However, Pure Storage, is 5.24 times more volatile than Marathon Petroleum. It trades about 0.29 of its potential returns per unit of risk. Marathon Petroleum is currently generating about -0.31 per unit of risk. If you would invest  7,253  in Pure Storage, on October 4, 2024 and sell it today you would earn a total of  2,907  from holding Pure Storage, or generate 40.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Pure Storage,  vs.  Marathon Petroleum

Pure Storage,

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pure Storage, sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Pure Storage, and Marathon Petroleum

The main advantage of trading using opposite Pure Storage, and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage, 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 Pure Storage, 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.