Correlation Between Magellan Midstream and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Magellan Midstream and Targa Resources 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 Magellan Midstream and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Midstream Partners and Targa Resources, you can compare the effects of market volatilities on Magellan Midstream and Targa Resources 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 Magellan Midstream with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Midstream and Targa Resources.
Diversification Opportunities for Magellan Midstream and Targa Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Magellan and Targa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Midstream Partners and Targa Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources and Magellan Midstream 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 Magellan Midstream Partners are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources has no effect on the direction of Magellan Midstream i.e., Magellan Midstream and Targa Resources go up and down completely randomly.
Pair Corralation between Magellan Midstream and Targa Resources
If you would invest 19,383 in Targa Resources on December 1, 2024 and sell it today you would earn a total of 789.00 from holding Targa Resources or generate 4.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Magellan Midstream Partners vs. Targa Resources
Performance |
Timeline |
Magellan Midstream |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Targa Resources |
Magellan Midstream and Targa Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magellan Midstream and Targa Resources
The main advantage of trading using opposite Magellan Midstream and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Midstream position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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