Correlation Between Genesis Energy and MPLX LP
Can any of the company-specific risk be diversified away by investing in both Genesis Energy and MPLX LP 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 MPLX LP 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 MPLX LP, you can compare the effects of market volatilities on Genesis Energy and MPLX LP 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 MPLX LP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesis Energy and MPLX LP.
Diversification Opportunities for Genesis Energy and MPLX LP
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Genesis and MPLX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and MPLX LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLX LP 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 MPLX LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLX LP has no effect on the direction of Genesis Energy i.e., Genesis Energy and MPLX LP go up and down completely randomly.
Pair Corralation between Genesis Energy and MPLX LP
Considering the 90-day investment horizon Genesis Energy is expected to generate 11.37 times less return on investment than MPLX LP. In addition to that, Genesis Energy is 1.39 times more volatile than MPLX LP. It trades about 0.01 of its total potential returns per unit of risk. MPLX LP is currently generating about 0.23 per unit of volatility. If you would invest 4,864 in MPLX LP on November 3, 2024 and sell it today you would earn a total of 337.00 from holding MPLX LP or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Genesis Energy LP vs. MPLX LP
Performance |
| Timeline |
| Genesis Energy LP |
| MPLX LP |
Genesis Energy and MPLX LP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genesis Energy and MPLX LP
The main advantage of trading using opposite Genesis Energy and MPLX LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Energy position performs unexpectedly, MPLX LP 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 MPLX LP will offset losses from the drop in MPLX LP'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 |
| MPLX LP vs. ONEOK Inc | MPLX LP vs. Enterprise Products Partners | MPLX LP vs. Energy Transfer LP | MPLX LP 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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