Correlation Between NGL Energy and Dynagas LNG
Can any of the company-specific risk be diversified away by investing in both NGL Energy and Dynagas LNG 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 NGL Energy and Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NGL Energy Partners and Dynagas LNG Partners, you can compare the effects of market volatilities on NGL Energy and Dynagas LNG 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 NGL Energy with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and Dynagas LNG.
Diversification Opportunities for NGL Energy and Dynagas LNG
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NGL and Dynagas is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and NGL Energy 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 NGL Energy Partners are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of NGL Energy i.e., NGL Energy and Dynagas LNG go up and down completely randomly.
Pair Corralation between NGL Energy and Dynagas LNG
Assuming the 90 days trading horizon NGL Energy is expected to generate 1.47 times less return on investment than Dynagas LNG. In addition to that, NGL Energy is 1.47 times more volatile than Dynagas LNG Partners. It trades about 0.03 of its total potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.06 per unit of volatility. If you would invest 2,441 in Dynagas LNG Partners on August 24, 2024 and sell it today you would earn a total of 84.00 from holding Dynagas LNG Partners or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGL Energy Partners vs. Dynagas LNG Partners
Performance |
| Timeline |
| NGL Energy Partners |
| Dynagas LNG Partners |
NGL Energy and Dynagas LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and Dynagas LNG
The main advantage of trading using opposite NGL Energy and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.| NGL Energy vs. NGL Energy Partners | NGL Energy vs. Dynagas LNG Partners | NGL Energy vs. GasLog Partners LP | NGL Energy vs. GasLog Partners LP |
| Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Dynagas LNG Partners | Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Seapeak LLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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