Correlation Between NuStar Energy and Hess Midstream

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

Diversification Opportunities for NuStar Energy and Hess Midstream

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between NuStar Energy and Hess Midstream

If you would invest  3,593  in Hess Midstream Partners on December 27, 2024 and sell it today you would earn a total of  711.00  from holding Hess Midstream Partners or generate 19.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

NuStar Energy LP  vs.  Hess Midstream Partners

 Performance 
       Timeline  
NuStar Energy LP 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
Hess Midstream Partners 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Hess Midstream Partners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Hess Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

NuStar Energy and Hess Midstream Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NuStar Energy and Hess Midstream

The main advantage of trading using opposite NuStar Energy and Hess Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NuStar Energy position performs unexpectedly, Hess 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 Hess Midstream will offset losses from the drop in Hess Midstream's long position.
The idea behind NuStar Energy LP and Hess Midstream Partners 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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