Correlation Between Enterprise Products and Pyxis Tankers

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

By analyzing existing cross correlation between Enterprise Products Partners and Pyxis Tankers, you can compare the effects of market volatilities on Enterprise Products and Pyxis Tankers 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 Enterprise Products with a short position of Pyxis Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Products and Pyxis Tankers.

Diversification Opportunities for Enterprise Products and Pyxis Tankers

-0.42

Correlation Coefficient

Enterprise Products  Pyxis Tankers

Very good diversification

The 3 months correlation between Enterprise and Pyxis is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Products Partners and Pyxis Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxis Tankers and Enterprise Products 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 Enterprise Products Partners are associated (or correlated) with Pyxis Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxis Tankers has no effect on the direction of Enterprise Products i.e., Enterprise Products and Pyxis Tankers go up and down completely randomly.

Pair Corralation between Enterprise Products and Pyxis Tankers

Considering the 90-day investment horizon Enterprise Products Partners is expected to generate 0.06 times more return on investment than Pyxis Tankers. However, Enterprise Products Partners is 16.26 times less risky than Pyxis Tankers. It trades about -0.02 of its potential returns per unit of risk. Pyxis Tankers is currently generating about -0.04 per unit of risk. If you would invest  3,389  in Enterprise Products Partners on November 28, 2024 and sell it today you would lose (62.00) from holding Enterprise Products Partners or give up 1.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.97%
Values	Daily Returns

Enterprise Products Partners  vs.  Pyxis Tankers

Enterprise Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enterprise Products Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Enterprise Products is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pyxis Tankers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Enterprise Products and Pyxis Tankers

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

The idea behind Enterprise Products Partners and Pyxis Tankers 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.