Correlation Between FLEX LNG and Martin Midstream

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

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

Diversification Opportunities for FLEX LNG and Martin Midstream

-0.39

Correlation Coefficient

FLEX LNG  Martin Midstream

Very good diversification

The 3 months correlation between FLEX and Martin is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners and FLEX LNG 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 FLEX LNG are associated (or correlated) with Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of FLEX LNG i.e., FLEX LNG and Martin Midstream go up and down completely randomly.

Pair Corralation between FLEX LNG and Martin Midstream

Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Martin Midstream. In addition to that, FLEX LNG is 9.86 times more volatile than Martin Midstream Partners. It trades about -0.33 of its total potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.05 per unit of volatility. If you would invest  399.00  in Martin Midstream Partners on September 27, 2024 and sell it today you would earn a total of  1.00  from holding Martin Midstream Partners or generate 0.25% return on investment over 90 days.

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

FLEX LNG  vs.  Martin Midstream Partners

FLEX LNG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Martin Midstream Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Martin Midstream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FLEX LNG and Martin Midstream

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

The idea behind FLEX LNG and Martin 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 Transaction History module to view history of all your transactions and understand their impact on performance.