Correlation Between GasLog Partners and NuStar Energy
Can any of the company-specific risk be diversified away by investing in both GasLog Partners and NuStar 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 GasLog Partners and NuStar Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GasLog Partners LP and NuStar Energy LP, you can compare the effects of market volatilities on GasLog Partners and NuStar 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 GasLog Partners with a short position of NuStar Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GasLog Partners and NuStar Energy.
Diversification Opportunities for GasLog Partners and NuStar Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GasLog and NuStar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GasLog Partners LP and NuStar Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuStar Energy LP and GasLog Partners 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 GasLog Partners LP are associated (or correlated) with NuStar Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuStar Energy LP has no effect on the direction of GasLog Partners i.e., GasLog Partners and NuStar Energy go up and down completely randomly.
Pair Corralation between GasLog Partners and NuStar Energy
Assuming the 90 days trading horizon GasLog Partners is expected to generate 2.24 times less return on investment than NuStar Energy. But when comparing it to its historical volatility, GasLog Partners LP is 1.44 times less risky than NuStar Energy. It trades about 0.05 of its potential returns per unit of risk. NuStar Energy LP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,464 in NuStar Energy LP on September 3, 2024 and sell it today you would earn a total of 270.00 from holding NuStar Energy LP or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.91% |
| Values | Daily Returns |
GasLog Partners LP vs. NuStar Energy LP
Performance |
| Timeline |
| GasLog Partners LP |
| NuStar Energy LP |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GasLog Partners and NuStar Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GasLog Partners and NuStar Energy
The main advantage of trading using opposite GasLog Partners and NuStar Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GasLog Partners position performs unexpectedly, NuStar 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 NuStar Energy will offset losses from the drop in NuStar Energy's long position.The idea behind GasLog Partners LP and NuStar Energy LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NuStar Energy vs. MPLX LP | NuStar Energy vs. Western Midstream Partners | NuStar Energy vs. Plains All American | NuStar Energy vs. Genesis Energy LP |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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