Correlation Between Global Partners and Williams Companies
Can any of the company-specific risk be diversified away by investing in both Global Partners and Williams Companies 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 Williams Companies 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 Williams Companies, you can compare the effects of market volatilities on Global Partners and Williams Companies 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 Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partners and Williams Companies.
Diversification Opportunities for Global Partners and Williams Companies
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Williams is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of Global Partners i.e., Global Partners and Williams Companies go up and down completely randomly.
Pair Corralation between Global Partners and Williams Companies
Assuming the 90 days trading horizon Global Partners LP is expected to under-perform the Williams Companies. But the preferred stock apears to be less risky and, when comparing its historical volatility, Global Partners LP is 2.54 times less risky than Williams Companies. The preferred stock trades about -0.11 of its potential returns per unit of risk. The Williams Companies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,887 in Williams Companies on January 29, 2024 and sell it today you would earn a total of 39.00 from holding Williams Companies or generate 1.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Partners LP vs. Williams Companies
Performance |
Timeline |
Global Partners LP |
Williams Companies |
Global Partners and Williams Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Partners and Williams Companies
The main advantage of trading using opposite Global Partners and Williams Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Partners position performs unexpectedly, Williams Companies 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 Williams Companies will offset losses from the drop in Williams Companies' long position.Global Partners vs. GasLog Partners LP | Global Partners vs. GasLog Partners LP | Global Partners vs. Aquagold International | Global Partners vs. Morningstar Unconstrained Allocation |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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