Correlation Between Marathon Petroleum and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and Elbit Systems 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 Elbit Systems 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 Elbit Systems, you can compare the effects of market volatilities on Marathon Petroleum and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and Elbit Systems.
Diversification Opportunities for Marathon Petroleum and Elbit Systems
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marathon and Elbit is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Elbit Systems go up and down completely randomly.
Pair Corralation between Marathon Petroleum and Elbit Systems
Considering the 90-day investment horizon Marathon Petroleum is expected to generate 7.34 times less return on investment than Elbit Systems. In addition to that, Marathon Petroleum is 1.12 times more volatile than Elbit Systems. It trades about 0.01 of its total potential returns per unit of risk. Elbit Systems is currently generating about 0.04 per unit of volatility. If you would invest 7,488,000 in Elbit Systems on January 25, 2024 and sell it today you would earn a total of 67,000 from holding Elbit Systems or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Marathon Petroleum Corp vs. Elbit Systems
Performance |
| Timeline |
| Marathon Petroleum Corp |
| Elbit Systems |
Marathon Petroleum and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and Elbit Systems
The main advantage of trading using opposite Marathon Petroleum and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.| Marathon Petroleum vs. Delek Logistics Partners | Marathon Petroleum vs. Crossamerica Partners LP | Marathon Petroleum vs. Sunoco LP |
| Elbit Systems vs. Al Bad Massuot Yitzhak | Elbit Systems vs. Gan Shmuel | Elbit Systems vs. Analyst IMS Investment |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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