Correlation Between Energy Transfer and National Storm
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and National Storm 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 National Storm 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 National Storm Recovery, you can compare the effects of market volatilities on Energy Transfer and National Storm 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 National Storm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and National Storm.
Diversification Opportunities for Energy Transfer and National Storm
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and National is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and National Storm Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storm Recovery 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 National Storm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storm Recovery has no effect on the direction of Energy Transfer i.e., Energy Transfer and National Storm go up and down completely randomly.
Pair Corralation between Energy Transfer and National Storm
Allowing for the 90-day total investment horizon Energy Transfer is expected to generate 1.57 times less return on investment than National Storm. But when comparing it to its historical volatility, Energy Transfer LP is 14.01 times less risky than National Storm. It trades about 0.39 of its potential returns per unit of risk. National Storm Recovery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 52.00 in National Storm Recovery on August 25, 2024 and sell it today you would lose (7.00) from holding National Storm Recovery or give up 13.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Transfer LP vs. National Storm Recovery
Performance |
| Timeline |
| Energy Transfer LP |
| National Storm Recovery |
Energy Transfer and National Storm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and National Storm
The main advantage of trading using opposite Energy Transfer and National Storm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, National Storm 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 National Storm will offset losses from the drop in National Storm's long position.| Energy Transfer vs. Kinder Morgan | Energy Transfer vs. MPLX LP | Energy Transfer vs. Enbridge | Energy Transfer vs. Enterprise Products Partners |
| National Storm vs. Interfor | National Storm vs. Western Forest Products | National Storm vs. Stella Jones | National Storm vs. Simpson Manufacturing |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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