# Correlation Between Enterprise Products and Super Micro

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

## Diversification Opportunities for Enterprise Products and Super Micro

 0.24 Correlation Coefficient

### Modest diversification

The 3 months correlation between Enterprise and Super is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Products Partners and Super Micro Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Micro Computer 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 Super Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Micro Computer has no effect on the direction of Enterprise Products i.e., Enterprise Products and Super Micro go up and down completely randomly.

## Pair Corralation between Enterprise Products and Super Micro

Considering the 90-day investment horizon Enterprise Products Partners is expected to under-perform the Super Micro. But the stock apears to be less risky and, when comparing its historical volatility, Enterprise Products Partners is 4.74 times less risky than Super Micro. The stock trades about -0.05 of its potential returns per unit of risk. The Super Micro Computer is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,113  in Super Micro Computer on December 29, 2022 and sell it today you would earn a total of  452.00  from holding Super Micro Computer or generate 4.47% 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.  Super Micro Computer

 Performance (%)
 Timeline
 Enterprise Products Correlation Profile

### 10 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Products Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Enterprise Products may actually be approaching a critical reversion point that can send shares even higher in April 2023.
 Performance Backtest Predict
 Super Micro Computer Correlation Profile

### 9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Super Micro Computer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Super Micro demonstrated solid returns over the last few months and may actually be approaching a breakup point.
 Performance Backtest Predict

## Enterprise Products and Super Micro Volatility Contrast

 Predicted Return Density
 Returns

## Pair Trading with Enterprise Products and Super Micro

The main advantage of trading using opposite Enterprise Products and Super Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Products position performs unexpectedly, Super Micro 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 Super Micro will offset losses from the drop in Super Micro's long position.
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The idea behind Enterprise Products Partners and Super Micro Computer 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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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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