Correlation Between NGL Energy and Seapeak LLC

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

Diversification Opportunities for NGL Energy and Seapeak LLC

-0.2

Correlation Coefficient

NGL Energy  Seapeak LLC

Good diversification

The 3 months correlation between NGL and Seapeak is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Seapeak LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seapeak LLC 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 Seapeak LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seapeak LLC has no effect on the direction of NGL Energy i.e., NGL Energy and Seapeak LLC go up and down completely randomly.

Pair Corralation between NGL Energy and Seapeak LLC

Considering the 90-day investment horizon NGL Energy Partners is expected to under-perform the Seapeak LLC. In addition to that, NGL Energy is 9.27 times more volatile than Seapeak LLC. It trades about 0.0 of its total potential returns per unit of risk. Seapeak LLC is currently generating about 0.05 per unit of volatility. If you would invest  2,544  in Seapeak LLC on December 29, 2024 and sell it today you would earn a total of  28.00  from holding Seapeak LLC or generate 1.1% return on investment over 90 days.

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

NGL Energy Partners  vs.  Seapeak LLC

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.

Seapeak LLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seapeak LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Seapeak LLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NGL Energy and Seapeak LLC

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

The idea behind NGL Energy Partners and Seapeak LLC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.