Correlation Between EnLink Midstream and Cool
Can any of the company-specific risk be diversified away by investing in both EnLink Midstream and Cool 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 EnLink Midstream and Cool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnLink Midstream LLC and Cool Company, you can compare the effects of market volatilities on EnLink Midstream and Cool 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 EnLink Midstream with a short position of Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnLink Midstream and Cool.
Diversification Opportunities for EnLink Midstream and Cool
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EnLink and Cool is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company and EnLink Midstream 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 EnLink Midstream LLC are associated (or correlated) with Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of EnLink Midstream i.e., EnLink Midstream and Cool go up and down completely randomly.
Pair Corralation between EnLink Midstream and Cool
Given the investment horizon of 90 days EnLink Midstream LLC is expected to generate 0.31 times more return on investment than Cool. However, EnLink Midstream LLC is 3.25 times less risky than Cool. It trades about 0.3 of its potential returns per unit of risk. Cool Company is currently generating about -0.28 per unit of risk. If you would invest 1,458 in EnLink Midstream LLC on August 28, 2024 and sell it today you would earn a total of 102.00 from holding EnLink Midstream LLC or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnLink Midstream LLC vs. Cool Company
Performance |
| Timeline |
| EnLink Midstream LLC |
| Cool Company |
EnLink Midstream and Cool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnLink Midstream and Cool
The main advantage of trading using opposite EnLink Midstream and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnLink Midstream position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool's long position.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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