Correlation Between EnLink Midstream and DHT Holdings

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

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

Diversification Opportunities for EnLink Midstream and DHT Holdings

-0.72

Correlation Coefficient

EnLink Midstream  DHT Holdings

Pay attention - limited upside

The 3 months correlation between EnLink and DHT is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC and DHT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHT Holdings and EnLink Midstream 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 EnLink Midstream LLC are associated (or correlated) with DHT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHT Holdings has no effect on the direction of EnLink Midstream i.e., EnLink Midstream and DHT Holdings go up and down completely randomly.

Pair Corralation between EnLink Midstream and DHT Holdings

Given the investment horizon of 90 days EnLink Midstream LLC is expected to under-perform the DHT Holdings. But the stock apears to be less risky and, when comparing its historical volatility, EnLink Midstream LLC is 1.55 times less risky than DHT Holdings. The stock trades about -0.19 of its potential returns per unit of risk. The DHT Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  928.00  in DHT Holdings on November 28, 2024 and sell it today you would earn a total of  137.00  from holding DHT Holdings or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.19%
Values	Daily Returns

EnLink Midstream LLC  vs.  DHT Holdings

EnLink Midstream LLC

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DHT Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DHT Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical indicators, DHT Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnLink Midstream and DHT Holdings

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

The idea behind EnLink Midstream LLC and DHT Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.