Correlation Between Magellan Midstream and Martin Midstream
Can any of the company-specific risk be diversified away by investing in both Magellan Midstream and Martin Midstream 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 Magellan Midstream and Martin Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Midstream Partners and Martin Midstream Partners, you can compare the effects of market volatilities on Magellan Midstream and Martin Midstream 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 Magellan Midstream with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Midstream and Martin Midstream.
Diversification Opportunities for Magellan Midstream and Martin Midstream
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magellan and Martin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Midstream Partners and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners and Magellan 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 Magellan Midstream Partners are associated (or correlated) with Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Magellan Midstream i.e., Magellan Midstream and Martin Midstream go up and down completely randomly.
Pair Corralation between Magellan Midstream and Martin Midstream
Considering the 90-day investment horizon Magellan Midstream Partners is expected to generate 0.33 times more return on investment than Martin Midstream. However, Magellan Midstream Partners is 3.05 times less risky than Martin Midstream. It trades about 0.2 of its potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.07 per unit of risk. If you would invest 6,158 in Magellan Midstream Partners on August 31, 2024 and sell it today you would earn a total of 393.00 from holding Magellan Midstream Partners or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Magellan Midstream Partners vs. Martin Midstream Partners
Performance |
| Timeline |
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Martin Midstream Partners |
Magellan Midstream and Martin Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Midstream and Martin Midstream
The main advantage of trading using opposite Magellan Midstream and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Midstream position performs unexpectedly, Martin Midstream 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
| Martin Midstream vs. Western Midstream Partners | Martin Midstream vs. EnLink Midstream LLC | Martin Midstream vs. Kinetik Holdings | Martin Midstream vs. NGL Energy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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