Correlation Between United Maritime and Hess Midstream

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

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

Diversification Opportunities for United Maritime and Hess Midstream

-0.64

Correlation Coefficient

United Maritime  Hess Midstream

Excellent diversification

The 3 months correlation between United and Hess is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and Hess Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess Midstream Partners and United Maritime 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 United Maritime are associated (or correlated) with Hess Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess Midstream Partners has no effect on the direction of United Maritime i.e., United Maritime and Hess Midstream go up and down completely randomly.

Pair Corralation between United Maritime and Hess Midstream

Given the investment horizon of 90 days United Maritime is expected to under-perform the Hess Midstream. In addition to that, United Maritime is 1.68 times more volatile than Hess Midstream Partners. It trades about -0.25 of its total potential returns per unit of risk. Hess Midstream Partners is currently generating about 0.05 per unit of volatility. If you would invest  3,492  in Hess Midstream Partners on September 24, 2024 and sell it today you would earn a total of  132.00  from holding Hess Midstream Partners or generate 3.78% return on investment over 90 days.

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

United Maritime  vs.  Hess Midstream Partners

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.

Hess Midstream Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Midstream Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hess Midstream is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United Maritime and Hess Midstream

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

The idea behind United Maritime and Hess 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.