Correlation Between Global Partners and Crescent Energy
Can any of the company-specific risk be diversified away by investing in both Global Partners and Crescent 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 Global Partners and Crescent Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Partners LP and Crescent Energy Co, you can compare the effects of market volatilities on Global Partners and Crescent 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 Global Partners with a short position of Crescent Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and Crescent Energy.
Diversification Opportunities for Global Partners and Crescent Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Crescent is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Crescent Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Energy and Global 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 Global Partners LP are associated (or correlated) with Crescent Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Energy has no effect on the direction of Global Partners i.e., Global Partners and Crescent Energy go up and down completely randomly.
Pair Corralation between Global Partners and Crescent Energy
Assuming the 90 days trading horizon Global Partners is expected to generate 1.98 times less return on investment than Crescent Energy. But when comparing it to its historical volatility, Global Partners LP is 6.33 times less risky than Crescent Energy. It trades about 0.11 of its potential returns per unit of risk. Crescent Energy Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,111 in Crescent Energy Co on August 30, 2024 and sell it today you would earn a total of 370.00 from holding Crescent Energy Co or generate 33.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Global Partners LP vs. Crescent Energy Co
Performance |
| Timeline |
| Global Partners LP |
| Crescent Energy |
Global Partners and Crescent Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Partners and Crescent Energy
The main advantage of trading using opposite Global Partners and Crescent Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Partners position performs unexpectedly, Crescent 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 Crescent Energy will offset losses from the drop in Crescent Energy's long position.| Global Partners vs. GasLog Partners LP | Global Partners vs. GasLog Partners LP | Global Partners vs. Aquagold International | Global Partners vs. Morningstar Unconstrained Allocation |
| Crescent Energy vs. Vital Energy | Crescent Energy vs. Permian Resources | Crescent Energy vs. Magnolia Oil Gas | Crescent Energy vs. Ring Energy |
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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