Correlation Between Energy Transfer and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Energy Transfer and Archer Daniels 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 Archer Daniels 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 Archer Daniels Midland, you can compare the effects of market volatilities on Energy Transfer and Archer Daniels 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 Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and Archer Daniels.
Diversification Opportunities for Energy Transfer and Archer Daniels
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Archer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland 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 Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Energy Transfer i.e., Energy Transfer and Archer Daniels go up and down completely randomly.
Pair Corralation between Energy Transfer and Archer Daniels
Allowing for the 90-day total investment horizon Energy Transfer is expected to generate 1.41 times less return on investment than Archer Daniels. But when comparing it to its historical volatility, Energy Transfer LP is 1.72 times less risky than Archer Daniels. It trades about 0.24 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5,121 in Archer Daniels Midland on January 20, 2024 and sell it today you would earn a total of 1,051 from holding Archer Daniels Midland or generate 20.52% 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. Archer Daniels Midland
Performance |
| Timeline |
| Energy Transfer LP |
| Archer Daniels Midland |
Energy Transfer and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Transfer and Archer Daniels
The main advantage of trading using opposite Energy Transfer and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Energy Transfer vs. Plains GP Holdings | Energy Transfer vs. Plains All American | Energy Transfer vs. MPLX LP | Energy Transfer vs. NuStar Energy LP |
| Archer Daniels vs. Tyson Foods | Archer Daniels vs. Cal Maine Foods | Archer Daniels vs. Dole PLC | Archer Daniels vs. Adecoagro SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |