Correlation Between Refinaria and Marathon Petroleum

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

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

Diversification Opportunities for Refinaria and Marathon Petroleum

0.55

Correlation Coefficient

Refinaria  Marathon Petroleum

Very weak diversification

The 3 months correlation between Refinaria and Marathon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum and Refinaria 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 Refinaria de Petrleos 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 Refinaria i.e., Refinaria and Marathon Petroleum go up and down completely randomly.

Pair Corralation between Refinaria and Marathon Petroleum

Assuming the 90 days trading horizon Refinaria de Petrleos is expected to generate 1.41 times more return on investment than Marathon Petroleum. However, Refinaria is 1.41 times more volatile than Marathon Petroleum. It trades about 0.05 of its potential returns per unit of risk. Marathon Petroleum is currently generating about 0.06 per unit of risk. 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

Refinaria de Petrleos  vs.  Marathon Petroleum

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.

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.

Pair Trading with Refinaria and Marathon Petroleum

The main advantage of trading using opposite Refinaria and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refinaria 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 Refinaria de Petrleos 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.