Correlation Between NGL Energy and Argent Mid

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

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

Diversification Opportunities for NGL Energy and Argent Mid

0.59

Correlation Coefficient

NGL Energy  Argent Mid

Very weak diversification

The 3 months correlation between NGL and Argent is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Argent Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argent Mid Cap and NGL 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 NGL Energy Partners are associated (or correlated) with Argent Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argent Mid Cap has no effect on the direction of NGL Energy i.e., NGL Energy and Argent Mid go up and down completely randomly.

Pair Corralation between NGL Energy and Argent Mid

Considering the 90-day investment horizon NGL Energy Partners is expected to generate 3.62 times more return on investment than Argent Mid. However, NGL Energy is 3.62 times more volatile than Argent Mid Cap. It trades about 0.01 of its potential returns per unit of risk. Argent Mid Cap is currently generating about -0.16 per unit of risk. If you would invest  477.00  in NGL Energy Partners on December 24, 2024 and sell it today you would lose (11.00) from holding NGL Energy Partners or give up 2.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

NGL Energy Partners  vs.  Argent Mid Cap

NGL Energy Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days NGL Energy Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, NGL Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Argent Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Argent Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with NGL Energy and Argent Mid

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

The idea behind NGL Energy Partners and Argent Mid Cap 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.