Correlation Between Equitrans Midstream and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Equitrans Midstream and Targa Resources 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 Equitrans Midstream and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equitrans Midstream Corp and Targa Resources, you can compare the effects of market volatilities on Equitrans Midstream and Targa Resources 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 Equitrans Midstream with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equitrans Midstream and Targa Resources.
Diversification Opportunities for Equitrans Midstream and Targa Resources
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equitrans and Targa is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Equitrans Midstream Corp and Targa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources and Equitrans Midstream 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 Equitrans Midstream Corp are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources has no effect on the direction of Equitrans Midstream i.e., Equitrans Midstream and Targa Resources go up and down completely randomly.
Pair Corralation between Equitrans Midstream and Targa Resources
If you would invest 16,398 in Targa Resources on August 28, 2024 and sell it today you would earn a total of 3,708 from holding Targa Resources or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Equitrans Midstream Corp vs. Targa Resources
Performance |
| Timeline |
| Equitrans Midstream Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Targa Resources |
Equitrans Midstream and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equitrans Midstream and Targa Resources
The main advantage of trading using opposite Equitrans Midstream and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equitrans Midstream position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.| Equitrans Midstream vs. MPLX LP | Equitrans Midstream vs. Plains All American | Equitrans Midstream vs. Hess Midstream Partners | Equitrans Midstream vs. Plains GP Holdings |
| Targa Resources vs. Plains GP Holdings | Targa Resources vs. Western Midstream Partners | Targa Resources vs. EnLink Midstream LLC | Targa Resources vs. Plains All American |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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