Correlation Between Reliance Industries and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Reliance Industries 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 Reliance Industries and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Industries Limited and Marathon Petroleum Corp, you can compare the effects of market volatilities on Reliance Industries 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 Reliance Industries with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Marathon Petroleum.
Diversification Opportunities for Reliance Industries and Marathon Petroleum
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Reliance and Marathon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited and Marathon Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum Corp and Reliance Industries 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 Reliance Industries Limited 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 Corp has no effect on the direction of Reliance Industries i.e., Reliance Industries and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Reliance Industries and Marathon Petroleum
Assuming the 90 days horizon Reliance Industries Limited is expected to generate 0.78 times more return on investment than Marathon Petroleum. However, Reliance Industries Limited is 1.28 times less risky than Marathon Petroleum. It trades about 0.02 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.0 per unit of risk. If you would invest 5,180 in Reliance Industries Limited on September 23, 2024 and sell it today you would earn a total of 260.00 from holding Reliance Industries Limited or generate 5.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Reliance Industries Limited vs. Marathon Petroleum Corp
Performance |
Timeline |
Reliance Industries |
Marathon Petroleum Corp |
Reliance Industries and Marathon Petroleum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reliance Industries and Marathon Petroleum
The main advantage of trading using opposite Reliance Industries and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Industries 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.Reliance Industries vs. Marathon Petroleum Corp | Reliance Industries vs. Valero Energy | Reliance Industries vs. Phillips 66 | Reliance Industries vs. Neste Oyj |
Marathon Petroleum vs. Reliance Industries Limited | Marathon Petroleum vs. Valero Energy | Marathon Petroleum vs. Phillips 66 | Marathon Petroleum vs. Neste Oyj |
Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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