Correlation Between EnLink Midstream and Hess Midstream

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

Diversification Opportunities for EnLink Midstream and Hess Midstream

-0.19

Correlation Coefficient

EnLink Midstream  Hess Midstream

Good diversification

The 3 months correlation between EnLink and Hess is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC and Hess Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess Midstream Partners 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 Hess Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess Midstream Partners has no effect on the direction of EnLink Midstream i.e., EnLink Midstream and Hess Midstream go up and down completely randomly.

Pair Corralation between EnLink Midstream and Hess Midstream

Given the investment horizon of 90 days EnLink Midstream LLC is expected to under-perform the Hess Midstream. But the stock apears to be less risky and, when comparing its historical volatility, EnLink Midstream LLC is 1.07 times less risky than Hess Midstream. The stock trades about -0.02 of its potential returns per unit of risk. The Hess Midstream Partners is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,593  in Hess Midstream Partners on December 27, 2024 and sell it today you would earn a total of  644.00  from holding Hess Midstream Partners or generate 17.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.7%
Values	Daily Returns

EnLink Midstream LLC  vs.  Hess Midstream Partners

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 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.

Hess Midstream Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Midstream Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hess Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnLink Midstream and Hess Midstream

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

The idea behind EnLink Midstream LLC and Hess 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.