Correlation Between Hess Midstream and Crestwood Equity
Can any of the company-specific risk be diversified away by investing in both Hess Midstream and Crestwood Equity 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 Crestwood Equity 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 Crestwood Equity Partners, you can compare the effects of market volatilities on Hess Midstream and Crestwood Equity 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 Crestwood Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and Crestwood Equity.
Diversification Opportunities for Hess Midstream and Crestwood Equity
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hess and Crestwood is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and Crestwood Equity Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crestwood Equity Partners 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 Crestwood Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crestwood Equity Partners has no effect on the direction of Hess Midstream i.e., Hess Midstream and Crestwood Equity go up and down completely randomly.
Pair Corralation between Hess Midstream and Crestwood Equity
Given the investment horizon of 90 days Hess Midstream Partners is expected to generate 0.73 times more return on investment than Crestwood Equity. However, Hess Midstream Partners is 1.37 times less risky than Crestwood Equity. It trades about 0.07 of its potential returns per unit of risk. Crestwood Equity Partners is currently generating about 0.04 per unit of risk. If you would invest 2,517 in Hess Midstream Partners on August 27, 2024 and sell it today you would earn a total of 1,161 from holding Hess Midstream Partners or generate 46.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.85% |
| Values | Daily Returns |
Hess Midstream Partners vs. Crestwood Equity Partners
Performance |
| Timeline |
| Hess Midstream Partners |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hess Midstream and Crestwood Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess Midstream and Crestwood Equity
The main advantage of trading using opposite Hess Midstream and Crestwood Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess Midstream position performs unexpectedly, Crestwood Equity 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 Crestwood Equity will offset losses from the drop in Crestwood Equity's 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 |
| Crestwood Equity vs. Western Midstream Partners | Crestwood Equity vs. DT Midstream | Crestwood Equity vs. MPLX LP | Crestwood Equity vs. Enterprise Products 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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