Correlation Between Hess Midstream and Avance Gas
Can any of the company-specific risk be diversified away by investing in both Hess Midstream and Avance Gas 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 Hess Midstream and Avance Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Midstream Partners and Avance Gas Holding, you can compare the effects of market volatilities on Hess Midstream and Avance Gas 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 Hess Midstream with a short position of Avance Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and Avance Gas.
Diversification Opportunities for Hess Midstream and Avance Gas
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hess and Avance is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and Avance Gas Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avance Gas Holding and Hess Midstream 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 Hess Midstream Partners are associated (or correlated) with Avance Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avance Gas Holding has no effect on the direction of Hess Midstream i.e., Hess Midstream and Avance Gas go up and down completely randomly.
Pair Corralation between Hess Midstream and Avance Gas
Given the investment horizon of 90 days Hess Midstream is expected to generate 9.34 times less return on investment than Avance Gas. But when comparing it to its historical volatility, Hess Midstream Partners is 9.47 times less risky than Avance Gas. It trades about 0.07 of its potential returns per unit of risk. Avance Gas Holding is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 396.00 in Avance Gas Holding on September 2, 2024 and sell it today you would earn a total of 646.00 from holding Avance Gas Holding or generate 163.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hess Midstream Partners vs. Avance Gas Holding
Performance |
| Timeline |
| Hess Midstream Partners |
| Avance Gas Holding |
Hess Midstream and Avance Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess Midstream and Avance Gas
The main advantage of trading using opposite Hess Midstream and Avance Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess Midstream position performs unexpectedly, Avance Gas 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 Avance Gas will offset losses from the drop in Avance Gas' long position.| Hess Midstream vs. MPLX LP | Hess Midstream vs. Western Midstream Partners | Hess Midstream vs. Plains All American | Hess Midstream vs. Antero Midstream Partners |
| Avance Gas vs. International Seaways | Avance Gas vs. Scorpio Tankers | Avance Gas vs. Dorian LPG | Avance Gas vs. Teekay Tankers |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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