Correlation Between Golar LNG and Plains All
Can any of the company-specific risk be diversified away by investing in both Golar LNG and Plains All 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 Plains All 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 Plains All American, you can compare the effects of market volatilities on Golar LNG and Plains All 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 Plains All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golar LNG and Plains All.
Diversification Opportunities for Golar LNG and Plains All
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Golar and Plains is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Golar LNG Limited and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American 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 Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Golar LNG i.e., Golar LNG and Plains All go up and down completely randomly.
Pair Corralation between Golar LNG and Plains All
Given the investment horizon of 90 days Golar LNG is expected to generate 608.0 times less return on investment than Plains All. In addition to that, Golar LNG is 1.68 times more volatile than Plains All American. It trades about 0.0 of its total potential returns per unit of risk. Plains All American is currently generating about 0.31 per unit of volatility. If you would invest 1,644 in Plains All American on August 27, 2024 and sell it today you would earn a total of 150.00 from holding Plains All American or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golar LNG Limited vs. Plains All American
Performance |
| Timeline |
| Golar LNG Limited |
| Plains All American |
Golar LNG and Plains All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golar LNG and Plains All
The main advantage of trading using opposite Golar LNG and Plains All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golar LNG position performs unexpectedly, Plains All 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 Plains All will offset losses from the drop in Plains All's long position.| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
| Plains All vs. Genesis Energy LP | Plains All vs. Western Midstream Partners | Plains All vs. Hess Midstream Partners | Plains All vs. Enterprise Products Partners |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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