Correlation Between Calumet Specialty and Genesis Energy

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

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

Diversification Opportunities for Calumet Specialty and Genesis Energy

0.87

Correlation Coefficient

Calumet Specialty  Genesis Energy

Very poor diversification

The 3 months correlation between Calumet and Genesis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP and Calumet Specialty 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 Calumet Specialty Products are associated (or correlated) with Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of Calumet Specialty i.e., Calumet Specialty and Genesis Energy go up and down completely randomly.

Pair Corralation between Calumet Specialty and Genesis Energy

Given the investment horizon of 90 days Calumet Specialty Products is expected to generate 1.39 times more return on investment than Genesis Energy. However, Calumet Specialty is 1.39 times more volatile than Genesis Energy LP. It trades about 0.2 of its potential returns per unit of risk. Genesis Energy LP is currently generating about 0.18 per unit of risk. If you would invest  1,110  in Calumet Specialty Products on May 4, 2025 and sell it today you would earn a total of  441.00  from holding Calumet Specialty Products or generate 39.73% return on investment over 90 days.

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

Calumet Specialty Products  vs.  Genesis Energy LP

Calumet Specialty

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calumet Specialty Products are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Calumet Specialty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genesis Energy LP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy LP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Genesis Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calumet Specialty and Genesis Energy

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

The idea behind Calumet Specialty Products and Genesis Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.