Correlation Between Genesis Energy and Enbridge
Can any of the company-specific risk be diversified away by investing in both Genesis Energy and Enbridge 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 Genesis Energy and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genesis Energy LP and Enbridge, you can compare the effects of market volatilities on Genesis Energy and Enbridge 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 Genesis Energy with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesis Energy and Enbridge.
Diversification Opportunities for Genesis Energy and Enbridge
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Genesis and Enbridge is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Genesis Energy 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 Genesis Energy LP are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Genesis Energy i.e., Genesis Energy and Enbridge go up and down completely randomly.
Pair Corralation between Genesis Energy and Enbridge
Considering the 90-day investment horizon Genesis Energy LP is expected to under-perform the Enbridge. In addition to that, Genesis Energy is 3.49 times more volatile than Enbridge. It trades about -0.1 of its total potential returns per unit of risk. Enbridge is currently generating about 0.32 per unit of volatility. If you would invest 4,051 in Enbridge on August 25, 2024 and sell it today you would earn a total of 275.00 from holding Enbridge or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genesis Energy LP vs. Enbridge
Performance |
| Timeline |
| Genesis Energy LP |
| Enbridge |
Genesis Energy and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genesis Energy and Enbridge
The main advantage of trading using opposite Genesis Energy and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Energy position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Genesis Energy vs. Brooge Holdings | Genesis Energy vs. Plains All American | Genesis Energy vs. Western Midstream Partners | Genesis Energy vs. Hess Midstream Partners |
| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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