Correlation Between Genesis Energy and SMLP Old

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

Diversification Opportunities for Genesis Energy and SMLP Old

0.0

Correlation Coefficient

Genesis Energy  SMLP Old

Pay attention - limited upside

The 3 months correlation between Genesis and SMLP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and SMLP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMLP Old 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 SMLP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMLP Old has no effect on the direction of Genesis Energy i.e., Genesis Energy and SMLP Old go up and down completely randomly.

Pair Corralation between Genesis Energy and SMLP Old

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Genesis Energy LP  vs.  SMLP Old

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.

SMLP Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SMLP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, SMLP Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Genesis Energy and SMLP Old

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

The idea behind Genesis Energy LP and SMLP Old 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.