Correlation Between Cheniere Energy and Holly Energy
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and Holly Energy 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 Cheniere Energy and Holly Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy and Holly Energy Partners, you can compare the effects of market volatilities on Cheniere Energy and Holly Energy 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 Cheniere Energy with a short position of Holly Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Holly Energy.
Diversification Opportunities for Cheniere Energy and Holly Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheniere and Holly is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy and Holly Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holly Energy Partners and Cheniere 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 Cheniere Energy are associated (or correlated) with Holly Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holly Energy Partners has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Holly Energy go up and down completely randomly.
Pair Corralation between Cheniere Energy and Holly Energy
If you would invest 17,756 in Cheniere Energy on August 24, 2024 and sell it today you would earn a total of 4,743 from holding Cheniere Energy or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Cheniere Energy vs. Holly Energy Partners
Performance |
| Timeline |
| Cheniere Energy |
| Holly Energy Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cheniere Energy and Holly Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Holly Energy
The main advantage of trading using opposite Cheniere Energy and Holly Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, Holly Energy 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 Holly Energy will offset losses from the drop in Holly Energy's long position.| Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Williams Companies | Cheniere Energy vs. Enterprise Products Partners | Cheniere Energy vs. ONEOK Inc |
| Holly Energy vs. MPLX LP | Holly Energy vs. Western Midstream Partners | Holly Energy vs. Plains All American | Holly Energy vs. Genesis Energy LP |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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