Correlation Between Cheniere Energy and Holly Energy

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

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

Diversification Opportunities for Cheniere Energy and Holly Energy

0.0

Correlation Coefficient

Cheniere Energy  Holly Energy

Pay attention - limited upside

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

Pair Corralation between Cheniere Energy and Holly Energy

If you would invest  21,307  in Cheniere Energy on December 28, 2024 and sell it today you would earn a total of  1,316  from holding Cheniere Energy or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cheniere Energy  vs.  Holly Energy Partners

Cheniere Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cheniere Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Holly Energy Partners

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cheniere Energy and Holly Energy

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

The idea behind Cheniere Energy and Holly Energy 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.