Correlation Between Crestwood Equity and Williams Companies
Can any of the company-specific risk be diversified away by investing in both Crestwood Equity and Williams Companies 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 Williams Companies 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 Williams Companies, you can compare the effects of market volatilities on Crestwood Equity and Williams Companies 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 Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crestwood Equity and Williams Companies.
Diversification Opportunities for Crestwood Equity and Williams Companies
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crestwood and Williams is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Crestwood Equity Partners and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of Crestwood Equity i.e., Crestwood Equity and Williams Companies go up and down completely randomly.
Pair Corralation between Crestwood Equity and Williams Companies
Given the investment horizon of 90 days Crestwood Equity is expected to generate 2.3 times less return on investment than Williams Companies. In addition to that, Crestwood Equity is 1.45 times more volatile than Williams Companies. It trades about 0.04 of its total potential returns per unit of risk. Williams Companies is currently generating about 0.12 per unit of volatility. If you would invest 3,020 in Williams Companies on August 27, 2024 and sell it today you would earn a total of 2,945 from holding Williams Companies or generate 97.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 31.85% |
| Values | Daily Returns |
Crestwood Equity Partners vs. Williams Companies
Performance |
| Timeline |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Williams Companies |
Crestwood Equity and Williams Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crestwood Equity and Williams Companies
The main advantage of trading using opposite Crestwood Equity and Williams Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crestwood Equity position performs unexpectedly, Williams Companies 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 Williams Companies will offset losses from the drop in Williams Companies' long position.| Crestwood Equity vs. Western Midstream Partners | Crestwood Equity vs. DT Midstream | Crestwood Equity vs. MPLX LP | Crestwood Equity vs. Enterprise Products Partners |
| Williams Companies vs. Enterprise Products Partners | Williams Companies vs. ONEOK Inc | Williams Companies vs. Energy Transfer LP | Williams Companies vs. Enbridge |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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