Correlation Between Genesis Energy and Global Partners

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

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

Diversification Opportunities for Genesis Energy and Global Partners

-0.55

Correlation Coefficient

Genesis Energy  Global Partners

Excellent diversification

The 3 months correlation between Genesis and Global is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and Genesis Energy 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 Genesis Energy LP are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Genesis Energy i.e., Genesis Energy and Global Partners go up and down completely randomly.

Pair Corralation between Genesis Energy and Global Partners

Considering the 90-day investment horizon Genesis Energy is expected to generate 1.84 times less return on investment than Global Partners. In addition to that, Genesis Energy is 1.01 times more volatile than Global Partners LP. It trades about 0.04 of its total potential returns per unit of risk. Global Partners LP is currently generating about 0.07 per unit of volatility. If you would invest  2,837  in Global Partners LP on September 4, 2024 and sell it today you would earn a total of  2,756  from holding Global Partners LP or generate 97.14% return on investment over 90 days.

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

Genesis Energy LP  vs.  Global Partners LP

Genesis Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Global Partners LP

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Global Partners reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genesis Energy and Global Partners

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

The idea behind Genesis Energy LP and Global Partners LP 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.