Correlation Between NGL Energy and CBL International
Can any of the company-specific risk be diversified away by investing in both NGL Energy and CBL International 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 CBL International 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 CBL International Limited, you can compare the effects of market volatilities on NGL Energy and CBL International 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 CBL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and CBL International.
Diversification Opportunities for NGL Energy and CBL International
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NGL and CBL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and CBL International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL International 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 CBL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL International has no effect on the direction of NGL Energy i.e., NGL Energy and CBL International go up and down completely randomly.
Pair Corralation between NGL Energy and CBL International
Considering the 90-day investment horizon NGL Energy Partners is expected to generate 0.38 times more return on investment than CBL International. However, NGL Energy Partners is 2.61 times less risky than CBL International. It trades about 0.1 of its potential returns per unit of risk. CBL International Limited is currently generating about 0.01 per unit of risk. If you would invest 117.00 in NGL Energy Partners on August 30, 2024 and sell it today you would earn a total of 366.00 from holding NGL Energy Partners or generate 312.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.89% |
| Values | Daily Returns |
NGL Energy Partners vs. CBL International Limited
Performance |
| Timeline |
| NGL Energy Partners |
| CBL International |
NGL Energy and CBL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and CBL International
The main advantage of trading using opposite NGL Energy and CBL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy position performs unexpectedly, CBL International 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 CBL International will offset losses from the drop in CBL International's long position.| NGL Energy vs. NGL Energy Partners | NGL Energy vs. Dynagas LNG Partners | NGL Energy vs. Martin Midstream Partners | NGL Energy vs. Kinetik Holdings |
| CBL International vs. GasLog Partners LP | CBL International vs. Dynagas LNG Partners | CBL International vs. Imperial Petroleum Preferred | CBL International vs. Imperial Petroleum |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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