Correlation Between EnLink Midstream and FLEX LNG

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

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

Diversification Opportunities for EnLink Midstream and FLEX LNG

-0.35

Correlation Coefficient

EnLink Midstream  FLEX LNG

Very good diversification

The 3 months correlation between EnLink and FLEX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC and FLEX LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEX LNG and EnLink Midstream 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 EnLink Midstream LLC are associated (or correlated) with FLEX LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEX LNG has no effect on the direction of EnLink Midstream i.e., EnLink Midstream and FLEX LNG go up and down completely randomly.

Pair Corralation between EnLink Midstream and FLEX LNG

Given the investment horizon of 90 days EnLink Midstream LLC is expected to generate 0.47 times more return on investment than FLEX LNG. However, EnLink Midstream LLC is 2.13 times less risky than FLEX LNG. It trades about 0.23 of its potential returns per unit of risk. FLEX LNG is currently generating about -0.06 per unit of risk. If you would invest  1,405  in EnLink Midstream LLC on August 31, 2024 and sell it today you would earn a total of  180.00  from holding EnLink Midstream LLC or generate 12.81% return on investment over 90 days.

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

EnLink Midstream LLC  vs.  FLEX LNG

EnLink Midstream LLC

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EnLink Midstream LLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, EnLink Midstream may actually be approaching a critical reversion point that can send shares even higher in December 2024.

FLEX LNG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLEX LNG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with EnLink Midstream and FLEX LNG

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

The idea behind EnLink Midstream LLC and FLEX LNG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.