Correlation Between Global Partners and Viper Energy

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

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

Diversification Opportunities for Global Partners and Viper Energy

0.17

Correlation Coefficient

Global Partners  Viper Energy

Average diversification

The 3 months correlation between Global and Viper is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Viper Energy Ut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viper Energy Ut and Global Partners 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 Global Partners LP are associated (or correlated) with Viper Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viper Energy Ut has no effect on the direction of Global Partners i.e., Global Partners and Viper Energy go up and down completely randomly.

Pair Corralation between Global Partners and Viper Energy

Assuming the 90 days trading horizon Global Partners LP is expected to under-perform the Viper Energy. But the preferred stock apears to be less risky and, when comparing its historical volatility, Global Partners LP is 3.05 times less risky than Viper Energy. The preferred stock trades about -0.11 of its potential returns per unit of risk. The Viper Energy Ut is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,810  in Viper Energy Ut on January 29, 2024 and sell it today you would earn a total of  161.00  from holding Viper Energy Ut or generate 4.23% return on investment over 90 days.

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

Global Partners LP  vs.  Viper Energy Ut

Global Partners LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Global Partners is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Viper Energy Ut

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Viper Energy Ut are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Viper Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Partners and Viper Energy

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

The idea behind Global Partners LP and Viper Energy Ut 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.