Correlation Between Vertex Energy and Marathon Petroleum

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Can any of the company-specific risk be diversified away by investing in both Vertex Energy 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 Vertex Energy and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertex Energy and Marathon Petroleum Corp, you can compare the effects of market volatilities on Vertex Energy 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 Vertex Energy with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertex Energy and Marathon Petroleum.

Diversification Opportunities for Vertex Energy and Marathon Petroleum

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Vertex and Marathon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vertex Energy 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 Vertex Energy 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 Vertex Energy 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 Vertex Energy i.e., Vertex Energy and Marathon Petroleum go up and down completely randomly.

Pair Corralation between Vertex Energy and Marathon Petroleum

Given the investment horizon of 90 days Vertex Energy is expected to under-perform the Marathon Petroleum. In addition to that, Vertex Energy is 2.11 times more volatile than Marathon Petroleum Corp. It trades about -0.03 of its total potential returns per unit of risk. Marathon Petroleum Corp is currently generating about 0.15 per unit of volatility. If you would invest  9,834  in Marathon Petroleum Corp on July 9, 2022 and sell it today you would earn a total of  860.00  from holding Marathon Petroleum Corp or generate 8.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Vertex Energy  vs.  Marathon Petroleum Corp

 Performance (%) 
       Timeline  
Vertex Energy 
Vertex Performance
0 of 100
Over the last 90 days Vertex Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Vertex Price Channel

Marathon Petroleum Corp 
Marathon Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Petroleum Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Marathon Petroleum sustained solid returns over the last few months and may actually be approaching a breakup point.

Marathon Price Channel

Vertex Energy and Marathon Petroleum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vertex Energy and Marathon Petroleum

The main advantage of trading using opposite Vertex Energy and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertex Energy 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.
Vertex Energy vs. Amazon Inc
The idea behind Vertex Energy and Marathon Petroleum Corp 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.
Marathon Petroleum vs. Amazon Inc
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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