Correlation Between MPLX LP and International Seaways
Can any of the company-specific risk be diversified away by investing in both MPLX LP and International Seaways 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 International Seaways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPLX LP and International Seaways, you can compare the effects of market volatilities on MPLX LP and International Seaways 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 International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPLX LP and International Seaways.
Diversification Opportunities for MPLX LP and International Seaways
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MPLX and International is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding MPLX LP and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of MPLX LP i.e., MPLX LP and International Seaways go up and down completely randomly.
Pair Corralation between MPLX LP and International Seaways
Given the investment horizon of 90 days MPLX LP is expected to generate 0.38 times more return on investment than International Seaways. However, MPLX LP is 2.66 times less risky than International Seaways. It trades about 0.21 of its potential returns per unit of risk. International Seaways is currently generating about 0.05 per unit of risk. If you would invest 2,965 in MPLX LP on August 31, 2024 and sell it today you would earn a total of 2,201 from holding MPLX LP or generate 74.23% 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. International Seaways
Performance |
| Timeline |
| MPLX LP |
| International Seaways |
MPLX LP and International Seaways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPLX LP and International Seaways
The main advantage of trading using opposite MPLX LP and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPLX LP position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' 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 |
| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways vs. Scorpio Tankers |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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