Correlation Between Enterprise Products and NuStar Energy
Can any of the company-specific risk be diversified away by investing in both Enterprise Products and NuStar 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 Enterprise Products and NuStar Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Products Partners and NuStar Energy LP, you can compare the effects of market volatilities on Enterprise Products and NuStar 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 Enterprise Products with a short position of NuStar Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Products and NuStar Energy.
Diversification Opportunities for Enterprise Products and NuStar Energy
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enterprise and NuStar is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Products Partners and NuStar Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuStar Energy LP and Enterprise Products 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 Enterprise Products Partners are associated (or correlated) with NuStar Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuStar Energy LP has no effect on the direction of Enterprise Products i.e., Enterprise Products and NuStar Energy go up and down completely randomly.
Pair Corralation between Enterprise Products and NuStar Energy
Considering the 90-day investment horizon Enterprise Products is expected to generate 2.91 times less return on investment than NuStar Energy. But when comparing it to its historical volatility, Enterprise Products Partners is 2.08 times less risky than NuStar Energy. It trades about 0.05 of its potential returns per unit of risk. NuStar Energy LP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,280 in NuStar Energy LP on January 26, 2024 and sell it today you would earn a total of 975.00 from holding NuStar Energy LP or generate 76.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Enterprise Products Partners vs. NuStar Energy LP
Performance |
Timeline |
Enterprise Products |
NuStar Energy LP |
Enterprise Products and NuStar Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enterprise Products and NuStar Energy
The main advantage of trading using opposite Enterprise Products and NuStar Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Products position performs unexpectedly, NuStar 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 NuStar Energy will offset losses from the drop in NuStar Energy's long position.The idea behind Enterprise Products Partners and NuStar Energy LP 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.NuStar Energy vs. ONEOK Inc | NuStar Energy vs. Enterprise Products Partners | NuStar Energy vs. Energy Transfer LP | NuStar Energy vs. Kinder Morgan |
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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Stocks Directory Find actively traded stocks across global markets | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |