Correlation Between MPLX LP and Green Plains
Can any of the company-specific risk be diversified away by investing in both MPLX LP and Green Plains 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 Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPLX LP and Green Plains Partners, you can compare the effects of market volatilities on MPLX LP and Green Plains 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 Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPLX LP and Green Plains.
Diversification Opportunities for MPLX LP and Green Plains
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MPLX and Green is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MPLX LP and Green Plains Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Plains Partners 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 Green Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Plains Partners has no effect on the direction of MPLX LP i.e., MPLX LP and Green Plains go up and down completely randomly.
Pair Corralation between MPLX LP and Green Plains
Given the investment horizon of 90 days MPLX LP is expected to generate 2.23 times less return on investment than Green Plains. But when comparing it to its historical volatility, MPLX LP is 1.63 times less risky than Green Plains. It trades about 0.21 of its potential returns per unit of risk. Green Plains Partners is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,274 in Green Plains Partners on August 31, 2024 and sell it today you would earn a total of 142.00 from holding Green Plains Partners or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 8.56% |
| Values | Daily Returns |
MPLX LP vs. Green Plains Partners
Performance |
| Timeline |
| MPLX LP |
| Green Plains Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MPLX LP and Green Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPLX LP and Green Plains
The main advantage of trading using opposite MPLX LP and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPLX LP position performs unexpectedly, Green Plains 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 Green Plains will offset losses from the drop in Green Plains' 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 |
| Green Plains vs. Plains All American | Green Plains vs. Genesis Energy LP | Green Plains vs. Western Midstream Partners | Green Plains 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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