Correlation Between Holly Energy and Golar LNG
Can any of the company-specific risk be diversified away by investing in both Holly Energy and Golar LNG 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 Holly Energy and Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holly Energy Partners and Golar LNG Limited, you can compare the effects of market volatilities on Holly Energy and Golar LNG 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 Holly Energy with a short position of Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holly Energy and Golar LNG.
Diversification Opportunities for Holly Energy and Golar LNG
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holly and Golar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Holly Energy Partners and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited and Holly Energy 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 Holly Energy Partners are associated (or correlated) with Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of Holly Energy i.e., Holly Energy and Golar LNG go up and down completely randomly.
Pair Corralation between Holly Energy and Golar LNG
If you would invest 3,711 in Golar LNG Limited on August 27, 2024 and sell it today you would lose (19.00) from holding Golar LNG Limited or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Holly Energy Partners vs. Golar LNG Limited
Performance |
| Timeline |
| Holly Energy Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Golar LNG Limited |
Holly Energy and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holly Energy and Golar LNG
The main advantage of trading using opposite Holly Energy and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holly Energy position performs unexpectedly, Golar LNG 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 Golar LNG will offset losses from the drop in Golar LNG's long position.| Holly Energy vs. MPLX LP | Holly Energy vs. Western Midstream Partners | Holly Energy vs. Plains All American | Holly Energy vs. Genesis Energy LP |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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