Correlation Between NGL Energy and Martin Midstream
Can any of the company-specific risk be diversified away by investing in both NGL Energy and Martin Midstream 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 NGL Energy and Martin Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NGL Energy Partners and Martin Midstream Partners, you can compare the effects of market volatilities on NGL Energy and Martin Midstream 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 NGL Energy with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and Martin Midstream.
Diversification Opportunities for NGL Energy and Martin Midstream
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NGL and Martin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners and NGL Energy 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 NGL Energy Partners are associated (or correlated) with Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of NGL Energy i.e., NGL Energy and Martin Midstream go up and down completely randomly.
Pair Corralation between NGL Energy and Martin Midstream
Considering the 90-day investment horizon NGL Energy Partners is expected to under-perform the Martin Midstream. In addition to that, NGL Energy is 1.15 times more volatile than Martin Midstream Partners. It trades about -0.1 of its total potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.23 per unit of volatility. If you would invest 299.00 in Martin Midstream Partners on March 11, 2024 and sell it today you would earn a total of 26.00 from holding Martin Midstream Partners or generate 8.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NGL Energy Partners vs. Martin Midstream Partners
Performance |
Timeline |
NGL Energy Partners |
Martin Midstream Partners |
NGL Energy and Martin Midstream Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NGL Energy and Martin Midstream
The main advantage of trading using opposite NGL Energy and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, Martin Midstream 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.NGL Energy vs. Genesis Energy LP | NGL Energy vs. Brooge Holdings | NGL Energy vs. Hess Midstream Partners | NGL Energy vs. DT Midstream |
Martin Midstream vs. Summit Midstream Partners | Martin Midstream vs. Brooge Holdings | Martin Midstream vs. Plains All American | Martin Midstream vs. Western Midstream Partners |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |