Correlation Between Global Partners and Martin Midstream
Can any of the company-specific risk be diversified away by investing in both Global Partners and Martin 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 Global Partners and Martin Midstream 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 Martin Midstream Partners, you can compare the effects of market volatilities on Global Partners and Martin 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 Global Partners with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and Martin Midstream.
Diversification Opportunities for Global Partners and Martin Midstream
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Martin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners 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 Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Global Partners i.e., Global Partners and Martin Midstream go up and down completely randomly.
Pair Corralation between Global Partners and Martin Midstream
Considering the 90-day investment horizon Global Partners is expected to generate 2.59 times less return on investment than Martin Midstream. But when comparing it to its historical volatility, Global Partners LP is 1.02 times less risky than Martin Midstream. It trades about 0.05 of its potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 233.00 in Martin Midstream Partners on August 27, 2024 and sell it today you would earn a total of 164.00 from holding Martin Midstream Partners or generate 70.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Partners LP vs. Martin Midstream Partners
Performance |
| Timeline |
| Global Partners LP |
| Martin Midstream Partners |
Global Partners and Martin Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Partners and Martin Midstream
The main advantage of trading using opposite Global Partners and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Partners position performs unexpectedly, Martin 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.| Global Partners vs. Plains All American | Global Partners vs. Genesis Energy LP | Global Partners vs. Western Midstream Partners | Global Partners vs. Hess Midstream Partners |
| Martin Midstream vs. Western Midstream Partners | Martin Midstream vs. EnLink Midstream LLC | Martin Midstream vs. Kinetik Holdings | Martin Midstream vs. NGL Energy 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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