Correlation Between Marathon Petroleum and HollyFrontier
Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and HollyFrontier 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 HollyFrontier 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 HollyFrontier, you can compare the effects of market volatilities on Marathon Petroleum and HollyFrontier 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 HollyFrontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and HollyFrontier.
Diversification Opportunities for Marathon Petroleum and HollyFrontier
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Marathon and HollyFrontier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and HollyFrontier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HollyFrontier 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 HollyFrontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HollyFrontier has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and HollyFrontier go up and down completely randomly.
Pair Corralation between Marathon Petroleum and HollyFrontier
If you would invest 19,738 in Marathon Petroleum Corp on January 26, 2024 and sell it today you would earn a total of 176.00 from holding Marathon Petroleum Corp or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Marathon Petroleum Corp vs. HollyFrontier
Performance |
| Timeline |
| Marathon Petroleum Corp |
| HollyFrontier |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Marathon Petroleum and HollyFrontier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Petroleum and HollyFrontier
The main advantage of trading using opposite Marathon Petroleum and HollyFrontier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, HollyFrontier 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 HollyFrontier will offset losses from the drop in HollyFrontier's long position.The idea behind Marathon Petroleum Corp and HollyFrontier 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.| HollyFrontier vs. National Rural Utilities | HollyFrontier vs. VirnetX Holding Corp | HollyFrontier vs. Black Hills | HollyFrontier vs. Alliant Energy Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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