Correlation Between MPLX LP and Marine Petroleum

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

By analyzing existing cross correlation between MPLX LP and Marine Petroleum Trust, you can compare the effects of market volatilities on MPLX LP and Marine 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 MPLX LP with a short position of Marine Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPLX LP and Marine Petroleum.

Diversification Opportunities for MPLX LP and Marine Petroleum

-0.39

Correlation Coefficient

MPLX LP  Marine Petroleum

Very good diversification

The 3 months correlation between MPLX and Marine is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MPLX LP and Marine Petroleum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Petroleum Trust and MPLX LP 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 MPLX LP are associated (or correlated) with Marine Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Petroleum Trust has no effect on the direction of MPLX LP i.e., MPLX LP and Marine Petroleum go up and down completely randomly.

Pair Corralation between MPLX LP and Marine Petroleum

Given the investment horizon of 90 days MPLX LP is expected to generate 1.43 times more return on investment than Marine Petroleum. However, MPLX LP is 1.43 times more volatile than Marine Petroleum Trust. It trades about -0.12 of its potential returns per unit of risk. Marine Petroleum Trust is currently generating about -0.19 per unit of risk. If you would invest  4,909  in MPLX LP on September 24, 2024 and sell it today you would lose (188.00) from holding MPLX LP or give up 3.83% of portfolio value over 90 days.

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

MPLX LP  vs.  Marine Petroleum Trust

MPLX LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MPLX LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, MPLX LP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marine Petroleum Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Petroleum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Marine Petroleum is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MPLX LP and Marine Petroleum

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

The idea behind MPLX LP and Marine Petroleum Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.