Correlation Between Golar LNG and EnLink Midstream
Can any of the company-specific risk be diversified away by investing in both Golar LNG and EnLink Midstream 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 Golar LNG and EnLink Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golar LNG Limited and EnLink Midstream LLC, you can compare the effects of market volatilities on Golar LNG and EnLink Midstream 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 Golar LNG with a short position of EnLink Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golar LNG and EnLink Midstream.
Diversification Opportunities for Golar LNG and EnLink Midstream
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Golar and EnLink is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Golar LNG Limited and EnLink Midstream LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnLink Midstream LLC and Golar LNG 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 Golar LNG Limited are associated (or correlated) with EnLink Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnLink Midstream LLC has no effect on the direction of Golar LNG i.e., Golar LNG and EnLink Midstream go up and down completely randomly.
Pair Corralation between Golar LNG and EnLink Midstream
Given the investment horizon of 90 days Golar LNG Limited is expected to generate 1.39 times more return on investment than EnLink Midstream. However, Golar LNG is 1.39 times more volatile than EnLink Midstream LLC. It trades about 0.17 of its potential returns per unit of risk. EnLink Midstream LLC is currently generating about 0.08 per unit of risk. If you would invest 2,721 in Golar LNG Limited on September 12, 2024 and sell it today you would earn a total of 1,547 from holding Golar LNG Limited or generate 56.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golar LNG Limited vs. EnLink Midstream LLC
Performance |
| Timeline |
| Golar LNG Limited |
| EnLink Midstream LLC |
Golar LNG and EnLink Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golar LNG and EnLink Midstream
The main advantage of trading using opposite Golar LNG and EnLink Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golar LNG position performs unexpectedly, EnLink Midstream 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 EnLink Midstream will offset losses from the drop in EnLink Midstream's long position.| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
| EnLink Midstream vs. Plains All American | EnLink Midstream vs. Hess Midstream Partners | EnLink Midstream vs. Western Midstream Partners | EnLink Midstream vs. Plains GP 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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