Correlation Between Excelerate Energy and EnLink Midstream

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

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

Diversification Opportunities for Excelerate Energy and EnLink Midstream

0.45

Correlation Coefficient

Excelerate Energy  EnLink Midstream

Very weak diversification

The 3 months correlation between Excelerate and EnLink is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and EnLink Midstream LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnLink Midstream LLC and Excelerate Energy 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 Excelerate Energy are associated (or correlated) with EnLink Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnLink Midstream LLC has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and EnLink Midstream go up and down completely randomly.

Pair Corralation between Excelerate Energy and EnLink Midstream

Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 1.58 times more return on investment than EnLink Midstream. However, Excelerate Energy is 1.58 times more volatile than EnLink Midstream LLC. It trades about 0.02 of its potential returns per unit of risk. EnLink Midstream LLC is currently generating about -0.31 per unit of risk. If you would invest  3,015  in Excelerate Energy on September 27, 2024 and sell it today you would earn a total of  9.00  from holding Excelerate Energy or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Excelerate Energy  vs.  EnLink Midstream LLC

Excelerate Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Excelerate Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

EnLink Midstream LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnLink Midstream LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, EnLink Midstream is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Excelerate Energy and EnLink Midstream

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

The idea behind Excelerate Energy and EnLink Midstream LLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.