Correlation Between SMLP Old and Targa Resources
Can any of the company-specific risk be diversified away by investing in both SMLP Old and Targa Resources 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 SMLP Old and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMLP Old and Targa Resources, you can compare the effects of market volatilities on SMLP Old and Targa Resources 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 SMLP Old with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMLP Old and Targa Resources.
Diversification Opportunities for SMLP Old and Targa Resources
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SMLP and Targa is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SMLP Old and Targa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources and SMLP Old 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 SMLP Old are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources has no effect on the direction of SMLP Old i.e., SMLP Old and Targa Resources go up and down completely randomly.
Pair Corralation between SMLP Old and Targa Resources
If you would invest 18,306 in Targa Resources on November 2, 2024 and sell it today you would earn a total of 2,215 from holding Targa Resources or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
SMLP Old vs. Targa Resources
Performance |
| Timeline |
| SMLP Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Targa Resources |
SMLP Old and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMLP Old and Targa Resources
The main advantage of trading using opposite SMLP Old and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMLP Old position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.| SMLP Old vs. Genesis Energy LP | SMLP Old vs. Brooge Holdings | SMLP Old vs. Hess Midstream Partners | SMLP Old vs. DT Midstream |
| Targa Resources vs. Plains GP Holdings | Targa Resources vs. Western Midstream Partners | Targa Resources vs. EnLink Midstream LLC | Targa Resources vs. Plains All American |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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