Correlation Between Crestwood Equity and Enbridge
Can any of the company-specific risk be diversified away by investing in both Crestwood Equity and Enbridge 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 Crestwood Equity and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crestwood Equity Partners and Enbridge, you can compare the effects of market volatilities on Crestwood Equity and Enbridge 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 Crestwood Equity with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crestwood Equity and Enbridge.
Diversification Opportunities for Crestwood Equity and Enbridge
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crestwood and Enbridge is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crestwood Equity Partners and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Crestwood Equity 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 Crestwood Equity Partners are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Crestwood Equity i.e., Crestwood Equity and Enbridge go up and down completely randomly.
Pair Corralation between Crestwood Equity and Enbridge
Given the investment horizon of 90 days Crestwood Equity Partners is expected to generate 1.62 times more return on investment than Enbridge. However, Crestwood Equity is 1.62 times more volatile than Enbridge. It trades about 0.04 of its potential returns per unit of risk. Enbridge is currently generating about 0.05 per unit of risk. If you would invest 2,728 in Crestwood Equity Partners on August 27, 2024 and sell it today you would earn a total of 214.00 from holding Crestwood Equity Partners or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.85% |
| Values | Daily Returns |
Crestwood Equity Partners vs. Enbridge
Performance |
| Timeline |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Enbridge |
Crestwood Equity and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crestwood Equity and Enbridge
The main advantage of trading using opposite Crestwood Equity and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crestwood Equity position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Crestwood Equity vs. Western Midstream Partners | Crestwood Equity vs. DT Midstream | Crestwood Equity vs. MPLX LP | Crestwood Equity vs. Enterprise Products Partners |
| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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