Correlation Between Hess Midstream and International Seaways
Can any of the company-specific risk be diversified away by investing in both Hess Midstream and International Seaways 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 International Seaways 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 International Seaways, you can compare the effects of market volatilities on Hess Midstream and International Seaways 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 International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and International Seaways.
Diversification Opportunities for Hess Midstream and International Seaways
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hess and International is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Hess Midstream i.e., Hess Midstream and International Seaways go up and down completely randomly.
Pair Corralation between Hess Midstream and International Seaways
Given the investment horizon of 90 days Hess Midstream Partners is expected to generate 0.77 times more return on investment than International Seaways. However, Hess Midstream Partners is 1.3 times less risky than International Seaways. It trades about 0.3 of its potential returns per unit of risk. International Seaways is currently generating about -0.21 per unit of risk. If you would invest 3,388 in Hess Midstream Partners on September 4, 2024 and sell it today you would earn a total of 309.00 from holding Hess Midstream Partners or generate 9.12% 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. International Seaways
Performance |
| Timeline |
| Hess Midstream Partners |
| International Seaways |
Hess Midstream and International Seaways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess Midstream and International Seaways
The main advantage of trading using opposite Hess Midstream and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess Midstream position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' 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 |
| International Seaways vs. EnLink Midstream LLC | International Seaways vs. Western Midstream Partners | International Seaways vs. Plains GP Holdings | International Seaways 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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