Correlation Between Holly Energy and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Holly Energy and Targa Resources 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 Targa Resources 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 Targa Resources, you can compare the effects of market volatilities on Holly Energy and Targa Resources 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 Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holly Energy and Targa Resources.
Diversification Opportunities for Holly Energy and Targa Resources
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Holly and Targa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Holly Energy Partners and Targa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources 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 Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources has no effect on the direction of Holly Energy i.e., Holly Energy and Targa Resources go up and down completely randomly.
Pair Corralation between Holly Energy and Targa Resources
If you would invest 16,398 in Targa Resources on August 28, 2024 and sell it today you would earn a total of 3,708 from holding Targa Resources or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Holly Energy Partners vs. Targa Resources
Performance |
| Timeline |
| Holly Energy Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Targa Resources |
Holly Energy and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holly Energy and Targa Resources
The main advantage of trading using opposite Holly Energy and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holly Energy position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' 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 |
| Targa Resources vs. Plains GP Holdings | Targa Resources vs. Western Midstream Partners | Targa Resources vs. EnLink Midstream LLC | Targa Resources vs. Plains All American |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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