Correlation Between Plains All and Global X
Can any of the company-specific risk be diversified away by investing in both Plains All and Global X 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 Global X 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 Global X MLP, you can compare the effects of market volatilities on Plains All and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains All and Global X.
Diversification Opportunities for Plains All and Global X
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Plains and Global is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Plains All American and Global X MLP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MLP 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MLP has no effect on the direction of Plains All i.e., Plains All and Global X go up and down completely randomly.
Pair Corralation between Plains All and Global X
Considering the 90-day investment horizon Plains All American is expected to generate 1.65 times more return on investment than Global X. However, Plains All is 1.65 times more volatile than Global X MLP. It trades about 0.1 of its potential returns per unit of risk. Global X MLP is currently generating about 0.1 per unit of risk. If you would invest 1,020 in Plains All American on September 3, 2024 and sell it today you would earn a total of 847.00 from holding Plains All American or generate 83.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plains All American vs. Global X MLP
Performance |
| Timeline |
| Plains All American |
| Global X MLP |
Plains All and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains All and Global X
The main advantage of trading using opposite Plains All and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains All position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X'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 |
| Global X vs. Global X MLP | Global X vs. InfraCap MLP ETF | Global X vs. Alerian MLP ETF | Global X vs. First Trust North |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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