Correlation Between Dorian LPG and El Paso
Can any of the company-specific risk be diversified away by investing in both Dorian LPG and El Paso 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 Dorian LPG and El Paso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorian LPG and El Paso Energy, you can compare the effects of market volatilities on Dorian LPG and El Paso 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 Dorian LPG with a short position of El Paso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorian LPG and El Paso.
Diversification Opportunities for Dorian LPG and El Paso
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dorian and EP-PC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dorian LPG and El Paso Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Paso Energy and Dorian LPG 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 Dorian LPG are associated (or correlated) with El Paso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Paso Energy has no effect on the direction of Dorian LPG i.e., Dorian LPG and El Paso go up and down completely randomly.
Pair Corralation between Dorian LPG and El Paso
Considering the 90-day investment horizon Dorian LPG is expected to under-perform the El Paso. In addition to that, Dorian LPG is 4.77 times more volatile than El Paso Energy. It trades about -0.32 of its total potential returns per unit of risk. El Paso Energy is currently generating about 0.09 per unit of volatility. If you would invest 4,714 in El Paso Energy on August 30, 2024 and sell it today you would earn a total of 122.00 from holding El Paso Energy or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorian LPG vs. El Paso Energy
Performance |
| Timeline |
| Dorian LPG |
| El Paso Energy |
Dorian LPG and El Paso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorian LPG and El Paso
The main advantage of trading using opposite Dorian LPG and El Paso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorian LPG position performs unexpectedly, El Paso 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 El Paso will offset losses from the drop in El Paso's long position.| Dorian LPG vs. DHT Holdings | Dorian LPG vs. Scorpio Tankers | Dorian LPG vs. Teekay Tankers | Dorian LPG vs. Torm PLC Class |
| El Paso vs. Dynagas LNG Partners | El Paso vs. GasLog Partners LP | El Paso vs. HUMANA INC | El Paso vs. Aquagold International |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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