Correlation Between Plains GP and Security Federal
Can any of the company-specific risk be diversified away by investing in both Plains GP and Security Federal 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 Security Federal 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 Security Federal, you can compare the effects of market volatilities on Plains GP and Security Federal 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 Security Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains GP and Security Federal.
Diversification Opportunities for Plains GP and Security Federal
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Plains and Security is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Plains GP Holdings and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal 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 Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of Plains GP i.e., Plains GP and Security Federal go up and down completely randomly.
Pair Corralation between Plains GP and Security Federal
Given the investment horizon of 90 days Plains GP Holdings is expected to generate 0.54 times more return on investment than Security Federal. However, Plains GP Holdings is 1.84 times less risky than Security Federal. It trades about 0.09 of its potential returns per unit of risk. Security Federal is currently generating about 0.02 per unit of risk. If you would invest 1,185 in Plains GP Holdings on November 2, 2024 and sell it today you would earn a total of 936.50 from holding Plains GP Holdings or generate 79.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.67% |
| Values | Daily Returns |
Plains GP Holdings vs. Security Federal
Performance |
| Timeline |
| Plains GP Holdings |
| Security Federal |
Plains GP and Security Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains GP and Security Federal
The main advantage of trading using opposite Plains GP and Security Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains GP position performs unexpectedly, Security Federal 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 Security Federal will offset losses from the drop in Security Federal'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 |
| Security Federal vs. MF Bancorp | Security Federal vs. Merchants Marine Bancorp | Security Federal vs. MNB Holdings Corp | Security Federal vs. United Bancorporation of |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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