Correlation Between Dynagas LNG and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG 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 Dynagas LNG and Western Midstream 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 Western Midstream Partners, you can compare the effects of market volatilities on Dynagas LNG 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 Dynagas LNG with a short position of Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Western Midstream.
Diversification Opportunities for Dynagas LNG and Western Midstream
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dynagas and Western is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG 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 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 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 Dynagas LNG i.e., Dynagas LNG and Western Midstream go up and down completely randomly.
Pair Corralation between Dynagas LNG and Western Midstream
Given the investment horizon of 90 days Dynagas LNG Partners is expected to generate 1.8 times more return on investment than Western Midstream. However, Dynagas LNG is 1.8 times more volatile than Western Midstream Partners. It trades about 0.05 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.08 per unit of risk. If you would invest 266.00 in Dynagas LNG Partners on September 3, 2024 and sell it today you would earn a total of 200.00 from holding Dynagas LNG Partners or generate 75.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynagas LNG Partners vs. Western Midstream Partners
Performance |
| Timeline |
| Dynagas LNG Partners |
| Western Midstream |
Dynagas LNG and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and Western Midstream
The main advantage of trading using opposite Dynagas LNG and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG 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.| Dynagas LNG vs. Tidewater Midstream and | Dynagas LNG vs. Martin Midstream Partners | Dynagas LNG vs. Kinetik Holdings | Dynagas LNG vs. Dynagas LNG Partners |
| Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. SPACE | Western Midstream vs. T Rowe Price |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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