Correlation Between Crestwood Equity and Hess Midstream
Can any of the company-specific risk be diversified away by investing in both Crestwood Equity 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 Crestwood Equity and Hess Midstream 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 Hess Midstream Partners, you can compare the effects of market volatilities on Crestwood Equity 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 Crestwood Equity with a short position of Hess Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crestwood Equity and Hess Midstream.
Diversification Opportunities for Crestwood Equity and Hess Midstream
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crestwood and Hess is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Crestwood Equity Partners 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 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 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 Crestwood Equity i.e., Crestwood Equity and Hess Midstream go up and down completely randomly.
Pair Corralation between Crestwood Equity and Hess Midstream
Given the investment horizon of 90 days Crestwood Equity is expected to generate 1.41 times less return on investment than Hess Midstream. In addition to that, Crestwood Equity is 1.35 times more volatile than Hess Midstream Partners. It trades about 0.03 of its total potential returns per unit of risk. Hess Midstream Partners is currently generating about 0.06 per unit of volatility. If you would invest 2,603 in Hess Midstream Partners on August 24, 2024 and sell it today you would earn a total of 1,079 from holding Hess Midstream Partners or generate 41.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.12% |
| Values | Daily Returns |
Crestwood Equity Partners vs. Hess Midstream Partners
Performance |
| Timeline |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hess Midstream Partners |
Crestwood Equity and Hess Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crestwood Equity and Hess Midstream
The main advantage of trading using opposite Crestwood Equity and Hess Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crestwood Equity 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.| Crestwood Equity vs. Western Midstream Partners | Crestwood Equity vs. DT Midstream | Crestwood Equity vs. MPLX LP | Crestwood Equity vs. Enterprise Products Partners |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |