Correlation Between Energy Transfer and DCP Midstream

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Can any of the company-specific risk be diversified away by investing in both Energy Transfer and DCP Midstream 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 DCP Midstream 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 DCP Midstream LP, you can compare the effects of market volatilities on Energy Transfer and DCP Midstream 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 DCP Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and DCP Midstream.

Diversification Opportunities for Energy Transfer and DCP Midstream

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Energy and DCP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and DCP Midstream LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCP Midstream LP 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 DCP Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCP Midstream LP has no effect on the direction of Energy Transfer i.e., Energy Transfer and DCP Midstream go up and down completely randomly.

Pair Corralation between Energy Transfer and DCP Midstream

If you would invest  1,940  in Energy Transfer LP on December 2, 2024 and sell it today you would lose (11.00) from holding Energy Transfer LP or give up 0.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Energy Transfer LP  vs.  DCP Midstream LP

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15ET DCP
       Timeline  
Energy Transfer LP 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Energy Transfer is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar1818.51919.52020.521
DCP Midstream LP 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DCP Midstream LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, DCP Midstream is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Energy Transfer and DCP Midstream Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.2-3.9-2.59-1.280.01.292.623.955.286.61 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15ET DCP
       Returns  

Pair Trading with Energy Transfer and DCP Midstream

The main advantage of trading using opposite Energy Transfer and DCP Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, DCP Midstream 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 DCP Midstream will offset losses from the drop in DCP Midstream's long position.
The idea behind Energy Transfer LP and DCP Midstream LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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