Correlation Between Marathon Petroleum and Valero Energy

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

Diversification Opportunities for Marathon Petroleum and Valero Energy

0.98

Correlation Coefficient

Marathon Petroleum  Valero Energy

Almost no diversification

The 3 months correlation between Marathon and Valero is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Petroleum Corp and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy 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 Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of Marathon Petroleum i.e., Marathon Petroleum and Valero Energy go up and down completely randomly.

Pair Corralation between Marathon Petroleum and Valero Energy

Considering the 90-day investment horizon Marathon Petroleum Corp is expected to generate 0.68 times more return on investment than Valero Energy. However, Marathon Petroleum Corp is 1.46 times less risky than Valero Energy. It trades about -0.19 of its potential returns per unit of risk. Valero Energy is currently generating about -0.13 per unit of risk. If you would invest  17,645  in Marathon Petroleum Corp on May 5, 2025 and sell it today you would lose (1,092) from holding Marathon Petroleum Corp or give up 6.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Marathon Petroleum Corp  vs.  Valero Energy

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.

Valero Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Valero Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Petroleum and Valero Energy

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

The idea behind Marathon Petroleum Corp and Valero Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.