Correlation Between EnLink Midstream and Tsakos Energy

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

By analyzing existing cross correlation between EnLink Midstream LLC and Tsakos Energy Navigation, you can compare the effects of market volatilities on EnLink Midstream and Tsakos 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 EnLink Midstream with a short position of Tsakos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnLink Midstream and Tsakos Energy.

Diversification Opportunities for EnLink Midstream and Tsakos Energy

-0.54

Correlation Coefficient

EnLink Midstream  Tsakos Energy

Excellent diversification

The 3 months correlation between EnLink and Tsakos is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EnLink Midstream LLC and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation and EnLink Midstream 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 EnLink Midstream LLC are associated (or correlated) with Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of EnLink Midstream i.e., EnLink Midstream and Tsakos Energy go up and down completely randomly.

Pair Corralation between EnLink Midstream and Tsakos Energy

Given the investment horizon of 90 days EnLink Midstream LLC is expected to generate 0.7 times more return on investment than Tsakos Energy. However, EnLink Midstream LLC is 1.43 times less risky than Tsakos Energy. It trades about 0.04 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about 0.03 per unit of risk. If you would invest  1,184  in EnLink Midstream LLC on August 21, 2024 and sell it today you would earn a total of  376.00  from holding EnLink Midstream LLC or generate 31.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EnLink Midstream LLC  vs.  Tsakos Energy Navigation

EnLink Midstream LLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EnLink Midstream LLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, EnLink Midstream exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with EnLink Midstream and Tsakos Energy

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

The idea behind EnLink Midstream LLC and Tsakos Energy Navigation 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.