Correlation Between Dynagas LNG and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG and Targa Resources 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 Targa Resources 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 Targa Resources, you can compare the effects of market volatilities on Dynagas LNG and Targa Resources 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 Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Targa Resources.
Diversification Opportunities for Dynagas LNG and Targa Resources
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dynagas and Targa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Targa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources 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 Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources has no effect on the direction of Dynagas LNG i.e., Dynagas LNG and Targa Resources go up and down completely randomly.
Pair Corralation between Dynagas LNG and Targa Resources
Given the investment horizon of 90 days Dynagas LNG is expected to generate 2.13 times less return on investment than Targa Resources. In addition to that, Dynagas LNG is 1.69 times more volatile than Targa Resources. It trades about 0.05 of its total potential returns per unit of risk. Targa Resources is currently generating about 0.17 per unit of volatility. If you would invest 6,960 in Targa Resources on August 27, 2024 and sell it today you would earn a total of 13,771 from holding Targa Resources or generate 197.86% 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. Targa Resources
Performance |
| Timeline |
| Dynagas LNG Partners |
| Targa Resources |
Dynagas LNG and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and Targa Resources
The main advantage of trading using opposite Dynagas LNG and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' 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 |
| Targa Resources vs. Plains GP Holdings | Targa Resources vs. Western Midstream Partners | Targa Resources vs. EnLink Midstream LLC | Targa Resources vs. Plains All American |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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