Correlation Between Marathon Petroleum and Star Gas

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

Diversification Opportunities for Marathon Petroleum and Star Gas

-0.65

Correlation Coefficient

Marathon Petroleum  Star Gas

Excellent diversification

The 3 months correlation between Marathon and Star is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Star Gas Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Gas Partners 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 Star Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Gas Partners has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Star Gas go up and down completely randomly.

Pair Corralation between Marathon Petroleum and Star Gas

Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 1.38 times more return on investment than Star Gas. However, Marathon Petroleum is 1.38 times more volatile than Star Gas Partners. It trades about 0.15 of its potential returns per unit of risk. Star Gas Partners is currently generating about -0.01 per unit of risk. If you would invest  14,252  in Marathon Petroleum Corp on May 5, 2025 and sell it today you would earn a total of  2,301  from holding Marathon Petroleum Corp or generate 16.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Marathon Petroleum Corp  vs.  Star Gas Partners

Marathon Petroleum Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Petroleum Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Marathon Petroleum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Star Gas Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Star Gas Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Star Gas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marathon Petroleum and Star Gas

The main advantage of trading using opposite Marathon Petroleum and Star Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Petroleum position performs unexpectedly, Star Gas 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 Star Gas will offset losses from the drop in Star Gas' long position.

The idea behind Marathon Petroleum Corp and Star Gas Partners 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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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.