Correlation Between Martin Midstream and Crestwood Equity
Can any of the company-specific risk be diversified away by investing in both Martin 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 Martin 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 Martin Midstream Partners and Crestwood Equity Partners, you can compare the effects of market volatilities on Martin 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 Martin Midstream with a short position of Crestwood Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Midstream and Crestwood Equity.
Diversification Opportunities for Martin Midstream and Crestwood Equity
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Martin and Crestwood is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Martin 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 Martin 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 Martin 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 Martin Midstream i.e., Martin Midstream and Crestwood Equity go up and down completely randomly.
Pair Corralation between Martin Midstream and Crestwood Equity
Given the investment horizon of 90 days Martin Midstream is expected to generate 1.65 times less return on investment than Crestwood Equity. In addition to that, Martin Midstream is 2.06 times more volatile than Crestwood Equity Partners. It trades about 0.07 of its total potential returns per unit of risk. Crestwood Equity Partners is currently generating about 0.22 per unit of volatility. If you would invest 2,662 in Crestwood Equity Partners on August 31, 2024 and sell it today you would earn a total of 280.00 from holding Crestwood Equity Partners or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 8.56% |
| Values | Daily Returns |
Martin Midstream Partners vs. Crestwood Equity Partners
Performance |
| Timeline |
| Martin Midstream Partners |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Martin Midstream and Crestwood Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Midstream and Crestwood Equity
The main advantage of trading using opposite Martin Midstream and Crestwood Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin 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.| Martin Midstream vs. Western Midstream Partners | Martin Midstream vs. EnLink Midstream LLC | Martin Midstream vs. Kinetik Holdings | Martin Midstream vs. NGL Energy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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