Correlation Between Dynagas LNG and Martin Midstream
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG and Martin 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 Dynagas LNG and Martin Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynagas LNG Partners and Martin Midstream Partners, you can compare the effects of market volatilities on Dynagas LNG and Martin 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 Dynagas LNG with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Martin Midstream.
Diversification Opportunities for Dynagas LNG and Martin Midstream
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dynagas and Martin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners and Dynagas LNG 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 Dynagas LNG Partners are associated (or correlated) with Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Dynagas LNG i.e., Dynagas LNG and Martin Midstream go up and down completely randomly.
Pair Corralation between Dynagas LNG and Martin Midstream
Assuming the 90 days trading horizon Dynagas LNG is expected to generate 5.18 times less return on investment than Martin Midstream. But when comparing it to its historical volatility, Dynagas LNG Partners is 4.52 times less risky than Martin Midstream. It trades about 0.15 of its potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Martin Midstream Partners on March 14, 2024 and sell it today you would earn a total of 70.00 from holding Martin Midstream Partners or generate 26.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dynagas LNG Partners vs. Martin Midstream Partners
Performance |
Timeline |
Dynagas LNG Partners |
Martin Midstream Partners |
Dynagas LNG and Martin Midstream Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dynagas LNG and Martin Midstream
The main advantage of trading using opposite Dynagas LNG and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG position performs unexpectedly, Martin 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.Dynagas LNG vs. Tsakos Energy Navigation | Dynagas LNG vs. Tsakos Energy Navigation | Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Dynagas LNG Partners |
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Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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