Correlation Between NGL Energy and GasLog Partners
Can any of the company-specific risk be diversified away by investing in both NGL Energy and GasLog Partners 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 GasLog Partners 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 GasLog Partners LP, you can compare the effects of market volatilities on NGL Energy and GasLog Partners 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 GasLog Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and GasLog Partners.
Diversification Opportunities for NGL Energy and GasLog Partners
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NGL and GasLog is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and GasLog Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GasLog Partners LP 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 GasLog Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GasLog Partners LP has no effect on the direction of NGL Energy i.e., NGL Energy and GasLog Partners go up and down completely randomly.
Pair Corralation between NGL Energy and GasLog Partners
Assuming the 90 days trading horizon NGL Energy Partners is expected to generate 0.33 times more return on investment than GasLog Partners. However, NGL Energy Partners is 2.99 times less risky than GasLog Partners. It trades about 0.2 of its potential returns per unit of risk. GasLog Partners LP is currently generating about 0.04 per unit of risk. If you would invest 2,300 in NGL Energy Partners on August 26, 2024 and sell it today you would earn a total of 44.00 from holding NGL Energy Partners or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGL Energy Partners vs. GasLog Partners LP
Performance |
| Timeline |
| NGL Energy Partners |
| GasLog Partners LP |
NGL Energy and GasLog Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and GasLog Partners
The main advantage of trading using opposite NGL Energy and GasLog Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, GasLog Partners 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 GasLog Partners will offset losses from the drop in GasLog Partners' 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 |
| GasLog Partners vs. GasLog Partners LP | GasLog Partners vs. Seapeak LLC | GasLog Partners vs. Dynagas LNG Partners | GasLog Partners 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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