Correlation Between Energy Transfer and Diamond S

Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Diamond S 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 Energy Transfer and Diamond S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Transfer LP and Diamond S Shipping, you can compare the effects of market volatilities on Energy Transfer and Diamond S 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 Energy Transfer with a short position of Diamond S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Diamond S.

Diversification Opportunities for Energy Transfer and Diamond S

0.0

Correlation Coefficient

Energy Transfer  Diamond S

Pay attention - limited upside

The 3 months correlation between Energy and Diamond is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Diamond S Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond S Shipping and Energy Transfer 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 Energy Transfer LP are associated (or correlated) with Diamond S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond S Shipping has no effect on the direction of Energy Transfer i.e., Energy Transfer and Diamond S go up and down completely randomly.

Pair Corralation between Energy Transfer and Diamond S

If you would invest  1,556  in Energy Transfer LP on January 25, 2024 and sell it today you would earn a total of  34.00  from holding Energy Transfer LP or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Energy Transfer LP  vs.  Diamond S Shipping

Energy Transfer LP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Energy Transfer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Diamond S Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond S Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Diamond S is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Energy Transfer and Diamond S

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

The idea behind Energy Transfer LP and Diamond S Shipping 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.