Correlation Between Avance Gas and Hess Midstream
Can any of the company-specific risk be diversified away by investing in both Avance Gas and Hess 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 Avance Gas and Hess Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avance Gas Holding and Hess Midstream Partners, you can compare the effects of market volatilities on Avance Gas and Hess 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 Avance Gas with a short position of Hess Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avance Gas and Hess Midstream.
Diversification Opportunities for Avance Gas and Hess Midstream
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Avance and Hess is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Avance Gas Holding and Hess Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess Midstream Partners and Avance Gas 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 Avance Gas Holding are associated (or correlated) with Hess Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess Midstream Partners has no effect on the direction of Avance Gas i.e., Avance Gas and Hess Midstream go up and down completely randomly.
Pair Corralation between Avance Gas and Hess Midstream
Assuming the 90 days horizon Avance Gas Holding is expected to generate 3.06 times more return on investment than Hess Midstream. However, Avance Gas is 3.06 times more volatile than Hess Midstream Partners. It trades about 0.04 of its potential returns per unit of risk. Hess Midstream Partners is currently generating about 0.08 per unit of risk. If you would invest 989.00 in Avance Gas Holding on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Avance Gas Holding or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avance Gas Holding vs. Hess Midstream Partners
Performance |
| Timeline |
| Avance Gas Holding |
| Hess Midstream Partners |
Avance Gas and Hess Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avance Gas and Hess Midstream
The main advantage of trading using opposite Avance Gas and Hess Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avance Gas position performs unexpectedly, Hess 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 Hess Midstream will offset losses from the drop in Hess Midstream's long position.| Avance Gas vs. International Seaways | Avance Gas vs. Scorpio Tankers | Avance Gas vs. Dorian LPG | Avance Gas vs. Teekay Tankers |
| Hess Midstream vs. MPLX LP | Hess Midstream vs. Western Midstream Partners | Hess Midstream vs. Plains All American | Hess Midstream vs. Antero 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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