Correlation Between MPLX LP and Genesis Energy
Can any of the company-specific risk be diversified away by investing in both MPLX LP and Genesis 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 MPLX LP and Genesis Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPLX LP and Genesis Energy LP, you can compare the effects of market volatilities on MPLX LP and Genesis 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 MPLX LP with a short position of Genesis Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPLX LP and Genesis Energy.
Diversification Opportunities for MPLX LP and Genesis Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MPLX and Genesis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MPLX LP and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP and MPLX LP 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 MPLX LP are associated (or correlated) with Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of MPLX LP i.e., MPLX LP and Genesis Energy go up and down completely randomly.
Pair Corralation between MPLX LP and Genesis Energy
Given the investment horizon of 90 days MPLX LP is expected to generate 0.39 times more return on investment than Genesis Energy. However, MPLX LP is 2.54 times less risky than Genesis Energy. It trades about 0.21 of its potential returns per unit of risk. Genesis Energy LP is currently generating about 0.03 per unit of risk. If you would invest 3,614 in MPLX LP on August 27, 2024 and sell it today you would earn a total of 1,336 from holding MPLX LP or generate 36.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MPLX LP vs. Genesis Energy LP
Performance |
| Timeline |
| MPLX LP |
| Genesis Energy LP |
MPLX LP and Genesis Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPLX LP and Genesis Energy
The main advantage of trading using opposite MPLX LP and Genesis Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPLX LP position performs unexpectedly, Genesis 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 Genesis Energy will offset losses from the drop in Genesis Energy's long position.| MPLX LP vs. ONEOK Inc | MPLX LP vs. Enterprise Products Partners | MPLX LP vs. Energy Transfer LP | MPLX LP vs. Plains All American |
| Genesis Energy vs. Brooge Holdings | Genesis Energy vs. Plains All American | Genesis Energy vs. Western Midstream Partners | Genesis Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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