Correlation Between Genesis Energy and Dynagas LNG

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

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

Diversification Opportunities for Genesis Energy and Dynagas LNG

-0.61

Correlation Coefficient

Genesis Energy  Dynagas LNG

Excellent diversification

The 3 months correlation between Genesis and Dynagas is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Genesis Energy 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 Genesis Energy LP are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Genesis Energy i.e., Genesis Energy and Dynagas LNG go up and down completely randomly.

Pair Corralation between Genesis Energy and Dynagas LNG

Considering the 90-day investment horizon Genesis Energy LP is expected to under-perform the Dynagas LNG. But the stock apears to be less risky and, when comparing its historical volatility, Genesis Energy LP is 1.16 times less risky than Dynagas LNG. The stock trades about -0.15 of its potential returns per unit of risk. The Dynagas LNG Partners is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  363.00  in Dynagas LNG Partners on September 15, 2024 and sell it today you would earn a total of  94.00  from holding Dynagas LNG Partners or generate 25.9% return on investment over 90 days.

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

Genesis Energy LP  vs.  Dynagas LNG Partners

Genesis Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dynagas LNG Partners

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynagas LNG Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynagas LNG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genesis Energy and Dynagas LNG

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

The idea behind Genesis Energy LP and Dynagas LNG Partners 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.