Correlation Between Brooge Holdings and NuStar Energy

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

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

Diversification Opportunities for Brooge Holdings and NuStar Energy

0.25

Correlation Coefficient

Brooge Holdings  NuStar Energy

Modest diversification

The 3 months correlation between Brooge and NuStar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Holdings and NuStar Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuStar Energy LP and Brooge Holdings 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 Brooge Holdings are associated (or correlated) with NuStar Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuStar Energy LP has no effect on the direction of Brooge Holdings i.e., Brooge Holdings and NuStar Energy go up and down completely randomly.

Pair Corralation between Brooge Holdings and NuStar Energy

Given the investment horizon of 90 days Brooge Holdings is expected to under-perform the NuStar Energy. In addition to that, Brooge Holdings is 15.0 times more volatile than NuStar Energy LP. It trades about -0.09 of its total potential returns per unit of risk. NuStar Energy LP is currently generating about 0.09 per unit of volatility. If you would invest  2,308  in NuStar Energy LP on March 13, 2024 and sell it today you would earn a total of  191.00  from holding NuStar Energy LP or generate 8.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.57%
Values	Daily Returns

Brooge Holdings  vs.  NuStar Energy LP

Brooge Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brooge Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NuStar Energy LP

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, NuStar Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brooge Holdings and NuStar Energy

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

The idea behind Brooge Holdings and NuStar Energy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.