Correlation Between Excelerate Energy and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Excelerate Energy 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 Excelerate Energy and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excelerate Energy and Targa Resources, you can compare the effects of market volatilities on Excelerate Energy 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 Excelerate Energy with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelerate Energy and Targa Resources.
Diversification Opportunities for Excelerate Energy and Targa Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Excelerate and Targa is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Targa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources and Excelerate 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 Excelerate Energy 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 Excelerate Energy i.e., Excelerate Energy and Targa Resources go up and down completely randomly.
Pair Corralation between Excelerate Energy and Targa Resources
Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 1.45 times more return on investment than Targa Resources. However, Excelerate Energy is 1.45 times more volatile than Targa Resources. It trades about 0.2 of its potential returns per unit of risk. Targa Resources is currently generating about 0.17 per unit of risk. If you would invest 1,831 in Excelerate Energy on November 2, 2024 and sell it today you would earn a total of 1,239 from holding Excelerate Energy or generate 67.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Excelerate Energy vs. Targa Resources
Performance |
| Timeline |
| Excelerate Energy |
| Targa Resources |
Excelerate Energy and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excelerate Energy and Targa Resources
The main advantage of trading using opposite Excelerate Energy and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelerate Energy 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.| Excelerate Energy vs. Clearway Energy | Excelerate Energy vs. Brookfield Renewable Corp | Excelerate Energy vs. Nextera Energy Partners | Excelerate Energy vs. Brookfield Renewable 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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