Correlation Between Plains GP and Dorian LPG
Can any of the company-specific risk be diversified away by investing in both Plains GP and Dorian LPG 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 GP and Dorian LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plains GP Holdings and Dorian LPG, you can compare the effects of market volatilities on Plains GP and Dorian LPG 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 GP with a short position of Dorian LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains GP and Dorian LPG.
Diversification Opportunities for Plains GP and Dorian LPG
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plains and Dorian is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Plains GP Holdings and Dorian LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorian LPG and Plains GP 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 GP Holdings are associated (or correlated) with Dorian LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorian LPG has no effect on the direction of Plains GP i.e., Plains GP and Dorian LPG go up and down completely randomly.
Pair Corralation between Plains GP and Dorian LPG
Given the investment horizon of 90 days Plains GP Holdings is expected to generate 0.72 times more return on investment than Dorian LPG. However, Plains GP Holdings is 1.39 times less risky than Dorian LPG. It trades about 0.28 of its potential returns per unit of risk. Dorian LPG is currently generating about -0.39 per unit of risk. If you would invest 1,740 in Plains GP Holdings on August 28, 2024 and sell it today you would earn a total of 168.00 from holding Plains GP Holdings or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plains GP Holdings vs. Dorian LPG
Performance |
| Timeline |
| Plains GP Holdings |
| Dorian LPG |
Plains GP and Dorian LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains GP and Dorian LPG
The main advantage of trading using opposite Plains GP and Dorian LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains GP position performs unexpectedly, Dorian LPG 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 Dorian LPG will offset losses from the drop in Dorian LPG's long position.| Plains GP vs. Targa Resources | Plains GP vs. Western Midstream Partners | Plains GP vs. MPLX LP | Plains GP vs. Plains All American |
| Dorian LPG vs. DHT Holdings | Dorian LPG vs. Scorpio Tankers | Dorian LPG vs. Teekay Tankers | Dorian LPG vs. Torm PLC Class |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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