Correlation Between Genesis Energy and Plains All

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

Diversification Opportunities for Genesis Energy and Plains All

0.49

Correlation Coefficient

Genesis Energy  Plains All

Very weak diversification

The 3 months correlation between Genesis and Plains is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American 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 Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Genesis Energy i.e., Genesis Energy and Plains All go up and down completely randomly.

Pair Corralation between Genesis Energy and Plains All

Considering the 90-day investment horizon Genesis Energy LP is expected to generate 1.65 times more return on investment than Plains All. However, Genesis Energy is 1.65 times more volatile than Plains All American. It trades about 0.29 of its potential returns per unit of risk. Plains All American is currently generating about 0.2 per unit of risk. If you would invest  988.00  in Genesis Energy LP on December 29, 2024 and sell it today you would earn a total of  588.00  from holding Genesis Energy LP or generate 59.51% return on investment over 90 days.

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

Genesis Energy LP  vs.  Plains All American

Genesis Energy LP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy LP are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Genesis Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Plains All American

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plains All American are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Plains All sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genesis Energy and Plains All

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

The idea behind Genesis Energy LP and Plains All American 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.