Correlation Between Excelerate Energy and Global Partners

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

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

Diversification Opportunities for Excelerate Energy and Global Partners

-0.02

Correlation Coefficient

Excelerate Energy  Global Partners

Good diversification

The 3 months correlation between Excelerate and Global is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners 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 Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and Global Partners go up and down completely randomly.

Pair Corralation between Excelerate Energy and Global Partners

Allowing for the 90-day total investment horizon Excelerate Energy is expected to under-perform the Global Partners. In addition to that, Excelerate Energy is 9.44 times more volatile than Global Partners LP. It trades about -0.11 of its total potential returns per unit of risk. Global Partners LP is currently generating about 0.02 per unit of volatility. If you would invest  2,596  in Global Partners LP on November 28, 2024 and sell it today you would earn a total of  2.00  from holding Global Partners LP or generate 0.08% 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.  Global Partners 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.

Global Partners LP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Excelerate Energy and Global Partners

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

The idea behind Excelerate Energy and Global Partners 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.