Correlation Between Plains All and Brooge Holdings
Can any of the company-specific risk be diversified away by investing in both Plains All and Brooge Holdings 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 Plains All and Brooge Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plains All American and Brooge Holdings, you can compare the effects of market volatilities on Plains All and Brooge Holdings 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 Plains All with a short position of Brooge Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains All and Brooge Holdings.
Diversification Opportunities for Plains All and Brooge Holdings
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plains and Brooge is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Plains All American and Brooge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Holdings and Plains All 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 Plains All American are associated (or correlated) with Brooge Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Holdings has no effect on the direction of Plains All i.e., Plains All and Brooge Holdings go up and down completely randomly.
Pair Corralation between Plains All and Brooge Holdings
Considering the 90-day investment horizon Plains All American is expected to generate 0.18 times more return on investment than Brooge Holdings. However, Plains All American is 5.53 times less risky than Brooge Holdings. It trades about 0.2 of its potential returns per unit of risk. Brooge Holdings is currently generating about -0.18 per unit of risk. If you would invest 1,679 in Plains All American on August 23, 2024 and sell it today you would earn a total of 103.00 from holding Plains All American or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plains All American vs. Brooge Holdings
Performance |
| Timeline |
| Plains All American |
| Brooge Holdings |
Plains All and Brooge Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains All and Brooge Holdings
The main advantage of trading using opposite Plains All and Brooge Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains All position performs unexpectedly, Brooge Holdings 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 Brooge Holdings will offset losses from the drop in Brooge Holdings' long position.| Plains All vs. ONEOK Inc | Plains All vs. Enterprise Products Partners | Plains All vs. Energy Transfer LP | Plains All vs. Kinder Morgan |
| Brooge Holdings vs. MPLX LP | Brooge Holdings vs. Western Midstream Partners | Brooge Holdings vs. Plains All American | Brooge Holdings vs. Antero 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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