Correlation Between Excelerate Energy and Genesis Energy

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

By analyzing existing cross correlation between Excelerate Energy and Genesis Energy LP, you can compare the effects of market volatilities on Excelerate Energy and Genesis Energy 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 Genesis Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelerate Energy and Genesis Energy.

Diversification Opportunities for Excelerate Energy and Genesis Energy

-0.37

Correlation Coefficient

Excelerate Energy  Genesis Energy

Very good diversification

The 3 months correlation between Excelerate and Genesis is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP 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 Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and Genesis Energy go up and down completely randomly.

Pair Corralation between Excelerate Energy and Genesis Energy

Allowing for the 90-day total investment horizon Excelerate Energy is expected to under-perform the Genesis Energy. But the stock apears to be less risky and, when comparing its historical volatility, Excelerate Energy is 1.93 times less risky than Genesis Energy. The stock trades about -0.18 of its potential returns per unit of risk. The Genesis Energy LP is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,038  in Genesis Energy LP on November 29, 2024 and sell it today you would earn a total of  189.00  from holding Genesis Energy LP or generate 18.21% return on investment over 90 days.

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

Excelerate Energy  vs.  Genesis Energy LP

Excelerate Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Excelerate Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Genesis Energy LP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Genesis Energy may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Excelerate Energy and Genesis Energy

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

The idea behind Excelerate Energy and Genesis Energy LP 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.