Correlation Between BP Prudhoe and Dynagas LNG
Can any of the company-specific risk be diversified away by investing in both BP Prudhoe and Dynagas LNG 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 BP Prudhoe and Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP Prudhoe Bay and Dynagas LNG Partners, you can compare the effects of market volatilities on BP Prudhoe and Dynagas LNG 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 BP Prudhoe with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and Dynagas LNG.
Diversification Opportunities for BP Prudhoe and Dynagas LNG
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BPT and Dynagas is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and BP Prudhoe 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 BP Prudhoe Bay are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of BP Prudhoe i.e., BP Prudhoe and Dynagas LNG go up and down completely randomly.
Pair Corralation between BP Prudhoe and Dynagas LNG
Considering the 90-day investment horizon BP Prudhoe Bay is expected to under-perform the Dynagas LNG. In addition to that, BP Prudhoe is 10.0 times more volatile than Dynagas LNG Partners. It trades about -0.06 of its total potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.09 per unit of volatility. If you would invest 2,355 in Dynagas LNG Partners on August 27, 2024 and sell it today you would earn a total of 184.00 from holding Dynagas LNG Partners or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP Prudhoe Bay vs. Dynagas LNG Partners
Performance |
| Timeline |
| BP Prudhoe Bay |
| Dynagas LNG Partners |
BP Prudhoe and Dynagas LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Prudhoe and Dynagas LNG
The main advantage of trading using opposite BP Prudhoe and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.| BP Prudhoe vs. Viper Energy Ut | BP Prudhoe vs. FLEX LNG | BP Prudhoe vs. Hess Midstream Partners | BP Prudhoe vs. Frontline |
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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 the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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