Correlation Between Visteon Corp and MARATHON

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

By analyzing existing cross correlation between Visteon Corp and MARATHON PETE P, you can compare the effects of market volatilities on Visteon Corp and MARATHON 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 Visteon Corp with a short position of MARATHON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visteon Corp and MARATHON.

Diversification Opportunities for Visteon Corp and MARATHON

0.5

Correlation Coefficient

Visteon Corp  MARATHON

Very weak diversification

The 3 months correlation between Visteon and MARATHON is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and MARATHON PETE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARATHON PETE P and Visteon Corp 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 Visteon Corp are associated (or correlated) with MARATHON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARATHON PETE P has no effect on the direction of Visteon Corp i.e., Visteon Corp and MARATHON go up and down completely randomly.

Pair Corralation between Visteon Corp and MARATHON

Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the MARATHON. In addition to that, Visteon Corp is 1.13 times more volatile than MARATHON PETE P. It trades about -0.06 of its total potential returns per unit of risk. MARATHON PETE P is currently generating about 0.03 per unit of volatility. If you would invest  9,751  in MARATHON PETE P on October 25, 2024 and sell it today you would earn a total of  141.00  from holding MARATHON PETE P or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.05%
Values	Daily Returns

Visteon Corp  vs.  MARATHON PETE P

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visteon Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MARATHON PETE P

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MARATHON PETE P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MARATHON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visteon Corp and MARATHON

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

The idea behind Visteon Corp and MARATHON PETE P 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.