Correlation Between Excelerate Energy and Martin Midstream

Can any of the company-specific risk be diversified away by investing in both Excelerate Energy 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 Excelerate Energy and Martin 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 Martin Midstream Partners, you can compare the effects of market volatilities on Excelerate Energy 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 Excelerate Energy with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelerate Energy and Martin Midstream.

Diversification Opportunities for Excelerate Energy and Martin Midstream

0.76

Correlation Coefficient

Excelerate Energy  Martin Midstream

Poor diversification

The 3 months correlation between Excelerate and Martin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy 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 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 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 Excelerate Energy i.e., Excelerate Energy and Martin Midstream go up and down completely randomly.

Pair Corralation between Excelerate Energy and Martin Midstream

Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 1.73 times more return on investment than Martin Midstream. However, Excelerate Energy is 1.73 times more volatile than Martin Midstream Partners. It trades about 0.31 of its potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.12 per unit of risk. If you would invest  1,831  in Excelerate Energy on September 3, 2024 and sell it today you would earn a total of  1,266  from holding Excelerate Energy or generate 69.14% return on investment over 90 days.

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

Excelerate Energy  vs.  Martin Midstream Partners

Excelerate Energy

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 24 (%) 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.

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 Excelerate Energy and Martin Midstream

The main advantage of trading using opposite Excelerate Energy and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelerate Energy 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 Excelerate Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.