Correlation Between Marathon Petroleum and BANK OF AMERICA

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Can any of the company-specific risk be diversified away by investing in both Marathon Petroleum and BANK OF AMERICA 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 BANK OF AMERICA 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 BANK OF AMERICA, you can compare the effects of market volatilities on Marathon Petroleum and BANK OF AMERICA 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 BANK OF AMERICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Petroleum and BANK OF AMERICA.

Diversification Opportunities for Marathon Petroleum and BANK OF AMERICA

  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Marathon and BAC-PD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and BANK OF AMERICA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OF AMERICA 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 BANK OF AMERICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF AMERICA has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and BANK OF AMERICA go up and down completely randomly.

Pair Corralation between Marathon Petroleum and BANK OF AMERICA

If you would invest  12,307  in Marathon Petroleum Corp on December 21, 2022 and sell it today you would earn a total of  318.00  from holding Marathon Petroleum Corp or generate 2.58% return on investment over 90 days.
Time Period3 Months [change]
ValuesDaily Returns

Marathon Petroleum Corp  vs.  BANK OF AMERICA

 Performance (%) 
Marathon Petroleum Corp 

Marathon Performance

6 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Petroleum Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Marathon Petroleum may actually be approaching a critical reversion point that can send shares even higher in April 2023.

BAC-PD Performance

0 of 100

Over the last 90 days BANK OF AMERICA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BANK OF AMERICA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Marathon Petroleum and BANK OF AMERICA Volatility Contrast

   Predicted Return Density   

Pair Trading with Marathon Petroleum and BANK OF AMERICA

The main advantage of trading using opposite Marathon Petroleum and BANK OF AMERICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, BANK OF AMERICA 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 BANK OF AMERICA will offset losses from the drop in BANK OF AMERICA's long position.
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The idea behind Marathon Petroleum Corp and BANK OF AMERICA 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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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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