Correlation Between NuStar Energy and Martin Midstream

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

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

Diversification Opportunities for NuStar Energy and Martin Midstream

0.84

Correlation Coefficient

NuStar Energy  Martin Midstream

Very poor diversification

The 3 months correlation between NuStar and Martin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NuStar Energy LP 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 NuStar 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 NuStar Energy LP 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 NuStar Energy i.e., NuStar Energy and Martin Midstream go up and down completely randomly.

Pair Corralation between NuStar Energy and Martin Midstream

If you would invest  356.00  in Martin Midstream Partners on September 3, 2024 and sell it today you would earn a total of  42.00  from holding Martin Midstream Partners or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

NuStar Energy LP  vs.  Martin Midstream Partners

NuStar Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuStar Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NuStar Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Martin Midstream Partners

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Martin Midstream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NuStar Energy and Martin Midstream

The main advantage of trading using opposite NuStar Energy and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NuStar Energy 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.

The idea behind NuStar Energy LP and Martin Midstream 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.

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 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.