Correlation Between NuStar Energy and DT Midstream

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

By analyzing existing cross correlation between NuStar Energy LP and DT Midstream, you can compare the effects of market volatilities on NuStar Energy and DT 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 NuStar Energy with a short position of DT Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of NuStar Energy and DT Midstream.

Diversification Opportunities for NuStar Energy and DT Midstream

0.0

Correlation Coefficient

NuStar Energy  DT Midstream

Pay attention - limited upside

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

Pair Corralation between NuStar Energy and DT Midstream

If you would invest  9,969  in DT Midstream on December 26, 2024 and sell it today you would earn a total of  83.00  from holding DT Midstream or generate 0.83% return on investment over 90 days.

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

NuStar Energy LP  vs.  DT Midstream

NuStar Energy LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days NuStar Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NuStar Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

DT Midstream

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DT Midstream are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, DT Midstream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NuStar Energy and DT Midstream

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

The idea behind NuStar Energy LP and DT Midstream 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.