Correlation Between Holly Energy and Magellan Midstream
Can any of the company-specific risk be diversified away by investing in both Holly Energy and Magellan 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 Holly Energy and Magellan Midstream 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 Magellan Midstream Partners, you can compare the effects of market volatilities on Holly Energy and Magellan 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 Holly Energy with a short position of Magellan Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holly Energy and Magellan Midstream.
Diversification Opportunities for Holly Energy and Magellan Midstream
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Holly and Magellan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Holly Energy Partners and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream 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 Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of Holly Energy i.e., Holly Energy and Magellan Midstream go up and down completely randomly.
Pair Corralation between Holly Energy and Magellan Midstream
If you would invest 6,551 in Magellan Midstream Partners on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Magellan Midstream Partners or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holly Energy Partners vs. Magellan Midstream Partners
Performance |
| Timeline |
| Holly Energy Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Holly Energy and Magellan Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holly Energy and Magellan Midstream
The main advantage of trading using opposite Holly Energy and Magellan Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holly Energy position performs unexpectedly, Magellan 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 Magellan Midstream will offset losses from the drop in Magellan Midstream'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 |
| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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