Correlation Between Energy Transfer and 50249AAD5

Can any of the company-specific risk be diversified away by investing in both Energy Transfer and 50249AAD5 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 50249AAD5 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 LYB INTERNATIONAL FINANCE, you can compare the effects of market volatilities on Energy Transfer and 50249AAD5 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 50249AAD5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and 50249AAD5.

Diversification Opportunities for Energy Transfer and 50249AAD5

-0.39

Correlation Coefficient

Energy Transfer  50249AAD5

Very good diversification

The 3 months correlation between Energy and 50249AAD5 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and LYB INTERNATIONAL FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTERNATIONAL FINANCE 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 50249AAD5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTERNATIONAL FINANCE has no effect on the direction of Energy Transfer i.e., Energy Transfer and 50249AAD5 go up and down completely randomly.

Pair Corralation between Energy Transfer and 50249AAD5

Allowing for the 90-day total investment horizon Energy Transfer is expected to generate 46.12 times less return on investment than 50249AAD5. But when comparing it to its historical volatility, Energy Transfer LP is 74.66 times less risky than 50249AAD5. It trades about 0.12 of its potential returns per unit of risk. LYB INTERNATIONAL FINANCE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,072  in LYB INTERNATIONAL FINANCE on October 11, 2024 and sell it today you would lose (84.00) from holding LYB INTERNATIONAL FINANCE or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.31%
Values	Daily Returns

Energy Transfer LP  vs.  LYB INTERNATIONAL FINANCE

Energy Transfer LP

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Energy Transfer unveiled solid returns over the last few months and may actually be approaching a breakup point.

LYB INTERNATIONAL FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB INTERNATIONAL FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAD5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energy Transfer and 50249AAD5

The main advantage of trading using opposite Energy Transfer and 50249AAD5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, 50249AAD5 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 50249AAD5 will offset losses from the drop in 50249AAD5's long position.

The idea behind Energy Transfer LP and LYB INTERNATIONAL FINANCE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.