Correlation Between Hess Midstream and Global Partners
Can any of the company-specific risk be diversified away by investing in both Hess Midstream and Global Partners 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 Global Partners 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 Global Partners LP, you can compare the effects of market volatilities on Hess Midstream and Global Partners 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 Global Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and Global Partners.
Diversification Opportunities for Hess Midstream and Global Partners
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hess and Global is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP 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 Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Hess Midstream i.e., Hess Midstream and Global Partners go up and down completely randomly.
Pair Corralation between Hess Midstream and Global Partners
Given the investment horizon of 90 days Hess Midstream is expected to generate 2.05 times less return on investment than Global Partners. But when comparing it to its historical volatility, Hess Midstream Partners is 1.28 times less risky than Global Partners. It trades about 0.26 of its potential returns per unit of risk. Global Partners LP is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 4,590 in Global Partners LP on August 27, 2024 and sell it today you would earn a total of 688.00 from holding Global Partners LP or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hess Midstream Partners vs. Global Partners LP
Performance |
| Timeline |
| Hess Midstream Partners |
| Global Partners LP |
Hess Midstream and Global Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess Midstream and Global Partners
The main advantage of trading using opposite Hess Midstream and Global Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess Midstream position performs unexpectedly, Global Partners 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 Global Partners will offset losses from the drop in Global Partners' 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 |
| Global Partners vs. Plains All American | Global Partners vs. Genesis Energy LP | Global Partners vs. Western Midstream Partners | Global Partners vs. Hess Midstream 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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