Correlation Between Crestwood Equity and Martin Midstream

Can any of the company-specific risk be diversified away by investing in both Crestwood Equity and Martin Midstream 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 Crestwood Equity and Martin Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crestwood Equity Partners and Martin Midstream Partners, you can compare the effects of market volatilities on Crestwood Equity and Martin Midstream 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 Crestwood Equity with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crestwood Equity and Martin Midstream.

Diversification Opportunities for Crestwood Equity and Martin Midstream

0.8

Correlation Coefficient

Crestwood Equity  Martin Midstream

Very poor diversification

The 3 months correlation between Crestwood and Martin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Crestwood Equity Partners and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners and Crestwood Equity 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 Crestwood Equity Partners are associated (or correlated) with Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Crestwood Equity i.e., Crestwood Equity and Martin Midstream go up and down completely randomly.

Pair Corralation between Crestwood Equity and Martin Midstream

If you would invest  356.00  in Martin Midstream Partners on September 3, 2024 and sell it today you would earn a total of  42.00  from holding Martin Midstream Partners or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Crestwood Equity Partners  vs.  Martin Midstream Partners

Crestwood Equity Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crestwood Equity Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crestwood Equity is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Martin Midstream Partners

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Martin Midstream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Crestwood Equity and Martin Midstream

The main advantage of trading using opposite Crestwood Equity and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crestwood Equity position performs unexpectedly, Martin Midstream 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.

The idea behind Crestwood Equity Partners and Martin Midstream Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.