Correlation Between NGL Energy and CSI Compressco

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

Diversification Opportunities for NGL Energy and CSI Compressco

0.0

Correlation Coefficient

NGL Energy  CSI Compressco

Pay attention - limited upside

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

Pair Corralation between NGL Energy and CSI Compressco

If you would invest  470.00  in NGL Energy Partners on December 25, 2024 and sell it today you would lose (3.00) from holding NGL Energy Partners or give up 0.64% of portfolio value over 90 days.

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

NGL Energy Partners  vs.  CSI Compressco LP

NGL Energy Partners

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NGL Energy Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

CSI Compressco LP

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NGL Energy and CSI Compressco

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

The idea behind NGL Energy Partners and CSI Compressco LP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.