Correlation Between Crestwood Equity and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Crestwood Equity and Western 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 Western 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 Western Midstream Partners, you can compare the effects of market volatilities on Crestwood Equity and Western 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 Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crestwood Equity and Western Midstream.
Diversification Opportunities for Crestwood Equity and Western Midstream
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Crestwood and Western is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Crestwood Equity Partners and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Crestwood Equity i.e., Crestwood Equity and Western Midstream go up and down completely randomly.
Pair Corralation between Crestwood Equity and Western Midstream
If you would invest 3,710 in Western Midstream Partners on August 27, 2024 and sell it today you would earn a total of 177.00 from holding Western Midstream Partners or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Crestwood Equity Partners vs. Western Midstream Partners
Performance |
| Timeline |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Western Midstream |
Crestwood Equity and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crestwood Equity and Western Midstream
The main advantage of trading using opposite Crestwood Equity and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crestwood Equity position performs unexpectedly, Western 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 Western Midstream will offset losses from the drop in Western 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 |
| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy LP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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