Correlation Between Marine Petroleum and Hess Midstream

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

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

Diversification Opportunities for Marine Petroleum and Hess Midstream

0.61

Correlation Coefficient

Marine Petroleum  Hess Midstream

Poor diversification

The 3 months correlation between Marine and Hess is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Marine Petroleum Trust and Hess Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess Midstream Partners and Marine Petroleum 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 Marine Petroleum Trust are associated (or correlated) with Hess Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess Midstream Partners has no effect on the direction of Marine Petroleum i.e., Marine Petroleum and Hess Midstream go up and down completely randomly.

Pair Corralation between Marine Petroleum and Hess Midstream

Assuming the 90 days horizon Marine Petroleum Trust is expected to generate 1.32 times more return on investment than Hess Midstream. However, Marine Petroleum is 1.32 times more volatile than Hess Midstream Partners. It trades about 0.39 of its potential returns per unit of risk. Hess Midstream Partners is currently generating about 0.5 per unit of risk. If you would invest  378.00  in Marine Petroleum Trust on October 20, 2024 and sell it today you would earn a total of  59.00  from holding Marine Petroleum Trust or generate 15.61% return on investment over 90 days.

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

Marine Petroleum Trust  vs.  Hess Midstream Partners

Marine Petroleum Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Petroleum Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Marine Petroleum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hess Midstream Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Midstream Partners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hess Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marine Petroleum and Hess Midstream

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

The idea behind Marine Petroleum Trust and Hess Midstream 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..