Correlation Between Star Gas and Marathon Petroleum

Can any of the company-specific risk be diversified away by investing in both Star Gas 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 Star Gas and Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Star Gas Partners and Marathon Petroleum Corp, you can compare the effects of market volatilities on Star Gas 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 Star Gas with a short position of Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Gas and Marathon Petroleum.

Diversification Opportunities for Star Gas and Marathon Petroleum

-0.65

Correlation Coefficient

Star Gas  Marathon Petroleum

Excellent diversification

The 3 months correlation between Star and Marathon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Star Gas Partners 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 Star Gas 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 Star Gas Partners 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 Star Gas i.e., Star Gas and Marathon Petroleum go up and down completely randomly.

Pair Corralation between Star Gas and Marathon Petroleum

Considering the 90-day investment horizon Star Gas Partners is expected to under-perform the Marathon Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Star Gas Partners is 1.41 times less risky than Marathon Petroleum. The stock trades about -0.04 of its potential returns per unit of risk. The Marathon Petroleum Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  14,374  in Marathon Petroleum Corp on May 6, 2025 and sell it today you would earn a total of  2,179  from holding Marathon Petroleum Corp or generate 15.16% return on investment over 90 days.

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

Star Gas Partners  vs.  Marathon Petroleum Corp

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.

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 11 (%) 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.

Pair Trading with Star Gas and Marathon Petroleum

The main advantage of trading using opposite Star Gas and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Gas 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.

The idea behind Star Gas Partners 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.