Correlation Between Targa Resources and Dynagas LNG
Can any of the company-specific risk be diversified away by investing in both Targa Resources and Dynagas LNG 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 Targa Resources and Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Targa Resources and Dynagas LNG Partners, you can compare the effects of market volatilities on Targa Resources and Dynagas LNG 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 Targa Resources with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Targa Resources and Dynagas LNG.
Diversification Opportunities for Targa Resources and Dynagas LNG
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Targa and Dynagas is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Targa Resources and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Targa Resources 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 Targa Resources are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Targa Resources i.e., Targa Resources and Dynagas LNG go up and down completely randomly.
Pair Corralation between Targa Resources and Dynagas LNG
Given the investment horizon of 90 days Targa Resources is expected to generate 6.2 times more return on investment than Dynagas LNG. However, Targa Resources is 6.2 times more volatile than Dynagas LNG Partners. It trades about 0.33 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.03 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Targa Resources vs. Dynagas LNG Partners
Performance |
| Timeline |
| Targa Resources |
| Dynagas LNG Partners |
Targa Resources and Dynagas LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Targa Resources and Dynagas LNG
The main advantage of trading using opposite Targa Resources and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Targa Resources position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.| Targa Resources vs. Plains GP Holdings | Targa Resources vs. Western Midstream Partners | Targa Resources vs. EnLink Midstream LLC | Targa Resources vs. Plains All American |
| Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Dynagas LNG Partners | Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. GasLog Partners LP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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