Correlation Between Enterprise Products and United Maritime

Can any of the company-specific risk be diversified away by investing in both Enterprise Products and United Maritime 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 Enterprise Products and United Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enterprise Products Partners and United Maritime, you can compare the effects of market volatilities on Enterprise Products and United Maritime 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 Enterprise Products with a short position of United Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Products and United Maritime.

Diversification Opportunities for Enterprise Products and United Maritime

-0.81

Correlation Coefficient

Enterprise Products  United Maritime

Pay attention - limited upside

The 3 months correlation between Enterprise and United is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Products Partners and United Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Maritime and Enterprise Products 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 Enterprise Products Partners are associated (or correlated) with United Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Maritime has no effect on the direction of Enterprise Products i.e., Enterprise Products and United Maritime go up and down completely randomly.

Pair Corralation between Enterprise Products and United Maritime

Considering the 90-day investment horizon Enterprise Products Partners is expected to under-perform the United Maritime. But the stock apears to be less risky and, when comparing its historical volatility, Enterprise Products Partners is 1.41 times less risky than United Maritime. The stock trades about -0.3 of its potential returns per unit of risk. The United Maritime is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  198.00  in United Maritime on September 28, 2024 and sell it today you would lose (12.00) from holding United Maritime or give up 6.06% of portfolio value over 90 days.

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

Enterprise Products Partners  vs.  United Maritime

Enterprise Products

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Products Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enterprise Products may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Enterprise Products and United Maritime

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

The idea behind Enterprise Products Partners and United Maritime 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.