Correlation Between Energy Transfer and Adams Resources
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Adams 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 Energy Transfer and Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Transfer LP and Adams Resources Energy, you can compare the effects of market volatilities on Energy Transfer and Adams 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 Energy Transfer with a short position of Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Adams Resources.
Diversification Opportunities for Energy Transfer and Adams Resources
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energy and Adams is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy and Energy Transfer 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 Energy Transfer LP are associated (or correlated) with Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Energy Transfer i.e., Energy Transfer and Adams Resources go up and down completely randomly.
Pair Corralation between Energy Transfer and Adams Resources
Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.36 times more return on investment than Adams Resources. However, Energy Transfer LP is 2.75 times less risky than Adams Resources. It trades about 0.13 of its potential returns per unit of risk. Adams Resources Energy is currently generating about 0.02 per unit of risk. If you would invest 1,001 in Energy Transfer LP on August 27, 2024 and sell it today you would earn a total of 906.00 from holding Energy Transfer LP or generate 90.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Transfer LP vs. Adams Resources Energy
Performance |
| Timeline |
| Energy Transfer LP |
| Adams Resources Energy |
Energy Transfer and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Adams Resources
The main advantage of trading using opposite Energy Transfer and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, Adams 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 Adams Resources will offset losses from the drop in Adams Resources' long position.| Energy Transfer vs. Kinder Morgan | Energy Transfer vs. MPLX LP | Energy Transfer vs. Enbridge | Energy Transfer vs. Enterprise Products Partners |
| Adams Resources vs. Delek Energy | Adams Resources vs. Crossamerica Partners LP | Adams Resources vs. Valvoline | Adams Resources vs. Star Gas Partners |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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