Correlation Between Energy Transfer and Cathay Pacific
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Cathay Pacific 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 Cathay Pacific 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 Cathay Pacific Airways, you can compare the effects of market volatilities on Energy Transfer and Cathay Pacific 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 Cathay Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Cathay Pacific.
Diversification Opportunities for Energy Transfer and Cathay Pacific
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Energy and Cathay is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Cathay Pacific Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Pacific Airways 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 Cathay Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Pacific Airways has no effect on the direction of Energy Transfer i.e., Energy Transfer and Cathay Pacific go up and down completely randomly.
Pair Corralation between Energy Transfer and Cathay Pacific
Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.5 times more return on investment than Cathay Pacific. However, Energy Transfer LP is 2.01 times less risky than Cathay Pacific. It trades about 0.46 of its potential returns per unit of risk. Cathay Pacific Airways is currently generating about 0.17 per unit of risk. If you would invest 1,575 in Energy Transfer LP on August 29, 2024 and sell it today you would earn a total of 345.00 from holding Energy Transfer LP or generate 21.9% 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. Cathay Pacific Airways
Performance |
| Timeline |
| Energy Transfer LP |
| Cathay Pacific Airways |
Energy Transfer and Cathay Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Cathay Pacific
The main advantage of trading using opposite Energy Transfer and Cathay Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, Cathay Pacific 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 Cathay Pacific will offset losses from the drop in Cathay Pacific's long position.| Energy Transfer vs. Kinder Morgan | Energy Transfer vs. MPLX LP | Energy Transfer vs. Enbridge | Energy Transfer vs. Enterprise Products Partners |
| Cathay Pacific vs. Singapore Airlines | Cathay Pacific vs. International Consolidated Airlines | Cathay Pacific vs. Air France KLM | Cathay Pacific vs. Qantas Airways Ltd |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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