Correlation Between Energy Transfer and Altus Power
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Altus Power 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 Altus Power 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 Altus Power, you can compare the effects of market volatilities on Energy Transfer and Altus Power 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 Altus Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Altus Power.
Diversification Opportunities for Energy Transfer and Altus Power
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energy and Altus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Altus Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Power 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 Altus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Power has no effect on the direction of Energy Transfer i.e., Energy Transfer and Altus Power go up and down completely randomly.
Pair Corralation between Energy Transfer and Altus Power
Allowing for the 90-day total investment horizon Energy Transfer is expected to generate 2.11 times less return on investment than Altus Power. But when comparing it to its historical volatility, Energy Transfer LP is 6.59 times less risky than Altus Power. It trades about 0.38 of its potential returns per unit of risk. Altus Power is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 297.00 in Altus Power on September 2, 2024 and sell it today you would earn a total of 135.00 from holding Altus Power or generate 45.45% 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. Altus Power
Performance |
| Timeline |
| Energy Transfer LP |
| Altus Power |
Energy Transfer and Altus Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Altus Power
The main advantage of trading using opposite Energy Transfer and Altus Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, Altus Power 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 Altus Power will offset losses from the drop in Altus Power's long position.| Energy Transfer vs. Kinder Morgan | Energy Transfer vs. MPLX LP | Energy Transfer vs. Enbridge | Energy Transfer vs. Enterprise Products Partners |
| Altus Power vs. Ormat Technologies | Altus Power vs. Enlight Renewable Energy | Altus Power vs. Fluence Energy | Altus Power vs. Renew Energy Global |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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