Correlation Between Energy Transfer and Cosan SA
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Cosan SA 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 Cosan SA 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 Cosan SA ADR, you can compare the effects of market volatilities on Energy Transfer and Cosan SA 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 Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Cosan SA.
Diversification Opportunities for Energy Transfer and Cosan SA
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Energy and Cosan is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Cosan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA ADR 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 Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA ADR has no effect on the direction of Energy Transfer i.e., Energy Transfer and Cosan SA go up and down completely randomly.
Pair Corralation between Energy Transfer and Cosan SA
Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.36 times more return on investment than Cosan SA. However, Energy Transfer LP is 2.78 times less risky than Cosan SA. It trades about 0.38 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.18 per unit of risk. If you would invest 1,573 in Energy Transfer LP on September 2, 2024 and sell it today you would earn a total of 413.00 from holding Energy Transfer LP or generate 26.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Transfer LP vs. Cosan SA ADR
Performance |
| Timeline |
| Energy Transfer LP |
| Cosan SA ADR |
Energy Transfer and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Cosan SA
The main advantage of trading using opposite Energy Transfer and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, Cosan SA 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 Cosan SA will offset losses from the drop in Cosan SA's long position.| Energy Transfer vs. Kinder Morgan | Energy Transfer vs. MPLX LP | Energy Transfer vs. Enbridge | Energy Transfer vs. Enterprise Products Partners |
| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Valvoline | Cosan SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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