Correlation Between Energy Transfer and Seapeak LLC

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

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

Diversification Opportunities for Energy Transfer and Seapeak LLC

0.58

Correlation Coefficient

Energy Transfer  Seapeak LLC

Very weak diversification

The 3 months correlation between Energy and Seapeak is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Seapeak LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seapeak LLC and Energy Transfer 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 Energy Transfer LP are associated (or correlated) with Seapeak LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seapeak LLC has no effect on the direction of Energy Transfer i.e., Energy Transfer and Seapeak LLC go up and down completely randomly.

Pair Corralation between Energy Transfer and Seapeak LLC

Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 2.65 times more return on investment than Seapeak LLC. However, Energy Transfer is 2.65 times more volatile than Seapeak LLC. It trades about 0.26 of its potential returns per unit of risk. Seapeak LLC is currently generating about 0.06 per unit of risk. If you would invest  1,590  in Energy Transfer LP on September 25, 2024 and sell it today you would earn a total of  367.00  from holding Energy Transfer LP or generate 23.08% return on investment over 90 days.

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

Energy Transfer LP  vs.  Seapeak LLC

Energy Transfer LP

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Energy Transfer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Seapeak LLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seapeak LLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Seapeak LLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energy Transfer and Seapeak LLC

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

The idea behind Energy Transfer LP and Seapeak LLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.