Correlation Between EnLink Midstream and Plains GP
Can any of the company-specific risk be diversified away by investing in both EnLink Midstream and Plains GP 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 Plains GP 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 Plains GP Holdings, you can compare the effects of market volatilities on EnLink Midstream and Plains GP 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 Plains GP. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnLink Midstream and Plains GP.
Diversification Opportunities for EnLink Midstream and Plains GP
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between EnLink and Plains is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC and Plains GP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains GP Holdings 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 Plains GP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains GP Holdings has no effect on the direction of EnLink Midstream i.e., EnLink Midstream and Plains GP go up and down completely randomly.
Pair Corralation between EnLink Midstream and Plains GP
Given the investment horizon of 90 days EnLink Midstream is expected to generate 1.21 times less return on investment than Plains GP. But when comparing it to its historical volatility, EnLink Midstream LLC is 1.43 times less risky than Plains GP. It trades about 0.3 of its potential returns per unit of risk. Plains GP Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,740 in Plains GP Holdings on August 28, 2024 and sell it today you would earn a total of 147.00 from holding Plains GP Holdings or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnLink Midstream LLC vs. Plains GP Holdings
Performance |
| Timeline |
| EnLink Midstream LLC |
| Plains GP Holdings |
EnLink Midstream and Plains GP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnLink Midstream and Plains GP
The main advantage of trading using opposite EnLink Midstream and Plains GP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnLink Midstream position performs unexpectedly, Plains GP 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 Plains GP will offset losses from the drop in Plains GP'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 |
| Plains GP vs. Targa Resources | Plains GP vs. Western Midstream Partners | Plains GP vs. MPLX LP | Plains GP 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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