Correlation Between BP Prudhoe and Genesis Energy
Can any of the company-specific risk be diversified away by investing in both BP Prudhoe and Genesis 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 BP Prudhoe and Genesis Energy 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 Genesis Energy LP, you can compare the effects of market volatilities on BP Prudhoe and Genesis 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 BP Prudhoe with a short position of Genesis Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and Genesis Energy.
Diversification Opportunities for BP Prudhoe and Genesis Energy
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BPT and Genesis is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP 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 Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of BP Prudhoe i.e., BP Prudhoe and Genesis Energy go up and down completely randomly.
Pair Corralation between BP Prudhoe and Genesis Energy
Considering the 90-day investment horizon BP Prudhoe Bay is expected to generate 1.71 times more return on investment than Genesis Energy. However, BP Prudhoe is 1.71 times more volatile than Genesis Energy LP. It trades about 0.01 of its potential returns per unit of risk. Genesis Energy LP is currently generating about -0.1 per unit of risk. If you would invest 109.00 in BP Prudhoe Bay on August 28, 2024 and sell it today you would lose (2.00) from holding BP Prudhoe Bay or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP Prudhoe Bay vs. Genesis Energy LP
Performance |
| Timeline |
| BP Prudhoe Bay |
| Genesis Energy LP |
BP Prudhoe and Genesis Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Prudhoe and Genesis Energy
The main advantage of trading using opposite BP Prudhoe and Genesis Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe position performs unexpectedly, Genesis 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 Genesis Energy will offset losses from the drop in Genesis Energy's long position.| BP Prudhoe vs. Viper Energy Ut | BP Prudhoe vs. FLEX LNG | BP Prudhoe vs. Hess Midstream Partners | BP Prudhoe vs. Frontline |
| Genesis Energy vs. Brooge Holdings | Genesis Energy vs. Plains All American | Genesis Energy vs. Western Midstream Partners | Genesis Energy vs. Hess 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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