Correlation Between Dynagas LNG and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG and Cheniere Energy 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 Dynagas LNG and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynagas LNG Partners and Cheniere Energy Partners, you can compare the effects of market volatilities on Dynagas LNG and Cheniere Energy 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 Dynagas LNG with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Cheniere Energy.
Diversification Opportunities for Dynagas LNG and Cheniere Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dynagas and Cheniere is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Dynagas LNG 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 Dynagas LNG Partners are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Dynagas LNG i.e., Dynagas LNG and Cheniere Energy go up and down completely randomly.
Pair Corralation between Dynagas LNG and Cheniere Energy
Given the investment horizon of 90 days Dynagas LNG Partners is expected to generate 1.81 times more return on investment than Cheniere Energy. However, Dynagas LNG is 1.81 times more volatile than Cheniere Energy Partners. It trades about 0.18 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.21 per unit of risk. If you would invest 377.00 in Dynagas LNG Partners on August 28, 2024 and sell it today you would earn a total of 103.00 from holding Dynagas LNG Partners or generate 27.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynagas LNG Partners vs. Cheniere Energy Partners
Performance |
| Timeline |
| Dynagas LNG Partners |
| Cheniere Energy Partners |
Dynagas LNG and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and Cheniere Energy
The main advantage of trading using opposite Dynagas LNG and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| Dynagas LNG vs. Tidewater Midstream and | Dynagas LNG vs. Martin Midstream Partners | Dynagas LNG vs. Kinetik Holdings | Dynagas LNG vs. Dynagas LNG Partners |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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