Correlation Between Genesis Energy and MPLX LP

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

Diversification Opportunities for Genesis Energy and MPLX LP

-0.62

Correlation Coefficient

Genesis Energy  MPLX LP

Excellent diversification

The 3 months correlation between Genesis and MPLX is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and MPLX LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLX 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 MPLX LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLX LP has no effect on the direction of Genesis Energy i.e., Genesis Energy and MPLX LP go up and down completely randomly.

Pair Corralation between Genesis Energy and MPLX LP

Considering the 90-day investment horizon Genesis Energy LP is expected to under-perform the MPLX LP. In addition to that, Genesis Energy is 2.36 times more volatile than MPLX LP. It trades about -0.07 of its total potential returns per unit of risk. MPLX LP is currently generating about 0.37 per unit of volatility. If you would invest  4,177  in MPLX LP on September 3, 2024 and sell it today you would earn a total of  989.00  from holding MPLX LP or generate 23.68% return on investment over 90 days.

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

Genesis Energy LP  vs.  MPLX 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.

MPLX LP

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MPLX LP are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, MPLX LP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genesis Energy and MPLX LP

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

The idea behind Genesis Energy LP and MPLX 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.