Correlation Between Martin Midstream and Holly Energy

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

By analyzing existing cross correlation between Martin Midstream Partners and Holly Energy Partners, you can compare the effects of market volatilities on Martin Midstream and Holly 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 Martin Midstream with a short position of Holly Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Midstream and Holly Energy.

Diversification Opportunities for Martin Midstream and Holly Energy

-0.3

Correlation Coefficient

Martin Midstream  Holly Energy

Very good diversification

The 3 months correlation between Martin and Holly is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Martin Midstream Partners and Holly Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holly Energy Partners and Martin Midstream 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 Martin Midstream Partners are associated (or correlated) with Holly Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holly Energy Partners has no effect on the direction of Martin Midstream i.e., Martin Midstream and Holly Energy go up and down completely randomly.

Pair Corralation between Martin Midstream and Holly Energy

If you would invest  286.00  in Martin Midstream Partners on March 5, 2024 and sell it today you would earn a total of  25.00  from holding Martin Midstream Partners or generate 8.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Martin Midstream Partners  vs.  Holly Energy Partners

Martin Midstream Partners

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile essential indicators, Martin Midstream reported solid returns over the last few months and may actually be approaching a breakup point.

Holly Energy Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holly Energy Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Holly Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Martin Midstream and Holly Energy

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

The idea behind Martin Midstream Partners and Holly Energy Partners 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.