Correlation Between Plains All and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Plains All and Cheniere Energy 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 Cheniere Energy 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 Cheniere Energy Partners, you can compare the effects of market volatilities on Plains All and Cheniere Energy 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains All and Cheniere Energy.
Diversification Opportunities for Plains All and Cheniere Energy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plains and Cheniere is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Plains All American and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Plains All i.e., Plains All and Cheniere Energy go up and down completely randomly.
Pair Corralation between Plains All and Cheniere Energy
Considering the 90-day investment horizon Plains All American is expected to generate 0.73 times more return on investment than Cheniere Energy. However, Plains All American is 1.37 times less risky than Cheniere Energy. It trades about 0.08 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.03 per unit of risk. If you would invest 1,108 in Plains All American on August 27, 2024 and sell it today you would earn a total of 649.00 from holding Plains All American or generate 58.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plains All American vs. Cheniere Energy Partners
Performance |
| Timeline |
| Plains All American |
| Cheniere Energy Partners |
Plains All and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains All and Cheniere Energy
The main advantage of trading using opposite Plains All and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains All position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| Plains All vs. Genesis Energy LP | Plains All vs. Western Midstream Partners | Plains All vs. Hess Midstream Partners | Plains All vs. Enterprise Products Partners |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |