Correlation Between Energy Transfer and Dynagas LNG

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

By analyzing existing cross correlation between Energy Transfer LP and Dynagas LNG Partners, you can compare the effects of market volatilities on Energy Transfer and Dynagas LNG 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 Energy Transfer with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Dynagas LNG.

Diversification Opportunities for Energy Transfer and Dynagas LNG

0.54

Correlation Coefficient

Energy Transfer  Dynagas LNG

Very weak diversification

The 3 months correlation between Energy and Dynagas is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Energy Transfer 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 Energy Transfer LP are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Energy Transfer i.e., Energy Transfer and Dynagas LNG go up and down completely randomly.

Pair Corralation between Energy Transfer and Dynagas LNG

Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.79 times more return on investment than Dynagas LNG. However, Energy Transfer LP is 1.26 times less risky than Dynagas LNG. It trades about -0.02 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about -0.24 per unit of risk. If you would invest  1,926  in Energy Transfer LP on December 28, 2024 and sell it today you would lose (55.00) from holding Energy Transfer LP or give up 2.86% of portfolio value over 90 days.

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

Energy Transfer LP  vs.  Dynagas LNG Partners

Energy Transfer LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Transfer LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Energy Transfer is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Dynagas LNG Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynagas LNG Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Energy Transfer and Dynagas LNG

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

The idea behind Energy Transfer LP and Dynagas LNG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.