Correlation Between MPLX LP and Global Partners

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

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

Diversification Opportunities for MPLX LP and Global Partners

-0.15

Correlation Coefficient

MPLX LP  Global Partners

Good diversification

The 3 months correlation between MPLX and Global is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MPLX LP and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and MPLX LP 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 MPLX LP are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of MPLX LP i.e., MPLX LP and Global Partners go up and down completely randomly.

Pair Corralation between MPLX LP and Global Partners

Given the investment horizon of 90 days MPLX LP is expected to generate 27.0 times more return on investment than Global Partners. However, MPLX LP is 27.0 times more volatile than Global Partners LP. It trades about 0.09 of its potential returns per unit of risk. Global Partners LP is currently generating about 0.55 per unit of risk. If you would invest  4,132  in MPLX LP on January 29, 2024 and sell it today you would earn a total of  63.00  from holding MPLX LP or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

MPLX LP  vs.  Global Partners LP

MPLX LP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MPLX LP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, MPLX LP may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MPLX LP and Global Partners

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

The idea behind MPLX LP and Global Partners LP 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 Transaction History module to view history of all your transactions and understand their impact on performance.