Correlation Between Extreme Biodiesel and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Extreme Biodiesel 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 Extreme Biodiesel and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extreme Biodiesel In and Marathon Petroleum Corp, you can compare the effects of market volatilities on Extreme Biodiesel 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 Extreme Biodiesel with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extreme Biodiesel and Marathon Petroleum.
Diversification Opportunities for Extreme Biodiesel and Marathon Petroleum
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extreme and Marathon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Extreme Biodiesel In 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 Extreme Biodiesel 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 Extreme Biodiesel In 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 Extreme Biodiesel i.e., Extreme Biodiesel and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Extreme Biodiesel and Marathon Petroleum
Given the investment horizon of 90 days Extreme Biodiesel In is expected to generate 187.55 times more return on investment than Marathon Petroleum. However, Extreme Biodiesel is 187.55 times more volatile than Marathon Petroleum Corp. It trades about 0.3 of its potential returns per unit of risk. Marathon Petroleum Corp is currently generating about -0.02 per unit of risk. If you would invest 0.01 in Extreme Biodiesel In on January 24, 2024 and sell it today you would earn a total of 0.00 from holding Extreme Biodiesel In or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extreme Biodiesel In vs. Marathon Petroleum Corp
Performance |
| Timeline |
| Extreme Biodiesel |
| Marathon Petroleum Corp |
Extreme Biodiesel and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extreme Biodiesel and Marathon Petroleum
The main advantage of trading using opposite Extreme Biodiesel and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extreme Biodiesel 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.| Extreme Biodiesel vs. Sino Land Co | Extreme Biodiesel vs. Holiday Island Holdings | Extreme Biodiesel vs. Sun Hung Kai | Extreme Biodiesel vs. Country Garden Holdings |
| Marathon Petroleum vs. Delek Logistics Partners | Marathon Petroleum vs. Crossamerica Partners LP | Marathon Petroleum vs. Sunoco LP |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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