Correlation Between Cheniere Energy and EnLink Midstream
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and EnLink 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 Cheniere Energy and EnLink Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and EnLink Midstream LLC, you can compare the effects of market volatilities on Cheniere Energy and EnLink 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 Cheniere Energy with a short position of EnLink Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and EnLink Midstream.
Diversification Opportunities for Cheniere Energy and EnLink Midstream
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheniere and EnLink is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and EnLink Midstream LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnLink Midstream LLC and Cheniere Energy 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 Cheniere Energy Partners are associated (or correlated) with EnLink Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnLink Midstream LLC has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and EnLink Midstream go up and down completely randomly.
Pair Corralation between Cheniere Energy and EnLink Midstream
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 1.3 times more return on investment than EnLink Midstream. However, Cheniere Energy is 1.3 times more volatile than EnLink Midstream LLC. It trades about 0.47 of its potential returns per unit of risk. EnLink Midstream LLC is currently generating about 0.36 per unit of risk. If you would invest 4,788 in Cheniere Energy Partners on August 27, 2024 and sell it today you would earn a total of 676.00 from holding Cheniere Energy Partners or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. EnLink Midstream LLC
Performance |
| Timeline |
| Cheniere Energy Partners |
| EnLink Midstream LLC |
Cheniere Energy and EnLink Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and EnLink Midstream
The main advantage of trading using opposite Cheniere Energy and EnLink Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, EnLink 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 EnLink Midstream will offset losses from the drop in EnLink Midstream's long position.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess Midstream Partners |
| EnLink Midstream vs. Plains All American | EnLink Midstream vs. Hess Midstream Partners | EnLink Midstream vs. Western Midstream Partners | EnLink Midstream vs. Plains GP Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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