Correlation Between Genesis Energy and NGL Energy
Can any of the company-specific risk be diversified away by investing in both Genesis Energy and NGL Energy 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 NGL Energy 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 NGL Energy Partners, you can compare the effects of market volatilities on Genesis Energy and NGL Energy 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 NGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesis Energy and NGL Energy.
Diversification Opportunities for Genesis Energy and NGL Energy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Genesis and NGL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and NGL Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGL Energy Partners 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 NGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGL Energy Partners has no effect on the direction of Genesis Energy i.e., Genesis Energy and NGL Energy go up and down completely randomly.
Pair Corralation between Genesis Energy and NGL Energy
Considering the 90-day investment horizon Genesis Energy LP is expected to under-perform the NGL Energy. In addition to that, Genesis Energy is 1.29 times more volatile than NGL Energy Partners. It trades about -0.09 of its total potential returns per unit of risk. NGL Energy Partners is currently generating about 0.17 per unit of volatility. If you would invest 408.00 in NGL Energy Partners on August 27, 2024 and sell it today you would earn a total of 36.00 from holding NGL Energy Partners or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genesis Energy LP vs. NGL Energy Partners
Performance |
| Timeline |
| Genesis Energy LP |
| NGL Energy Partners |
Genesis Energy and NGL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genesis Energy and NGL Energy
The main advantage of trading using opposite Genesis Energy and NGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Energy position performs unexpectedly, NGL Energy 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 NGL Energy will offset losses from the drop in NGL Energy'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 |
| NGL Energy vs. NGL Energy Partners | NGL Energy vs. Dynagas LNG Partners | NGL Energy vs. Martin Midstream Partners | NGL Energy vs. Kinetik Holdings |
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.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |