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Midstream Stocks: Analyzing Quantitative Drivers

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Midstream Stocks: Analyzing Quantitative Drivers PART 1 OF 3

EnLink Midstream Partners’ Implied Volatility Rose the Most

High implied volatility in midstream stocks

On April 19, 2017, Teekay LNG Partners (TGP) had an implied volatility of 40.5%—the highest among midstream companies in the Alerian MLP ETF (AMLP). Teekay LNG Partners’ current volatility is 6% above its 15-day average.

EnLink Midstream Partners’ Implied Volatility Rose the Most

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Remember, stocks that see large movements—or ones that are expected to see large movements in the future—can have high implied volatilities.

We’ll analyze Teekay LNG Partners’ returns in the next part of this series. First, let’s take a look at a few other midstream stocks with high implied volatilities as of April 19, 2017:

  • EnLink Midstream Partners (ENLC) – implied volatility of 38.2%, or 9.4% above its 15-day average
  • Energy Transfer Equity (ETE) – implied volatility of 36.6%, or 8.8% above its 15-day average
  • NGL Energy Partners (NGL) – implied volatility of 35.4%, or 7.7% above its 15-day average
  • Rice Midstream Partners (RMP) – implied volatility of 31.7%, or 0.5% above its 15-day average

The recent rise in EnLink Midstream Partners’ implied volatility compared to its 15-day average represents the largest increase of the five midstream stocks with the highest implied volatilities.

On April 13, 2017, EnLink Midstream Partners’ implied volatility rose 2.2%, while the stock fell 1.8%. On April 13, 2017, the company announced that it will report its 1Q17 earnings on May 2, 2017. Wall Street analysts expect its earnings to be $0.11 per share.

Midstream stocks with low implied volatilities

Midstream stocks with the lowest implied volatilities on April 19, 2017, include the following:

  • Spectra Energy Partners (SEP) – implied volatility of 14.7%, or 0.7% less than its 15-day average
  • Enterprise Products Partners (EPD) – implied volatility of 17.1%, or 1.5% more than its 15-day average
  • Magellan Midstream Partners (MMP) – implied volatility of 17.5%, or 8.9% more than its 15-day average
  • Buckeye Partners (BPL) – implied volatility of 17.5%, or 4.2% more than its 15-day average
  • EQT Midstream Partners (EQM) – implied volatility of 19.4%, or 3.3% lower than its 15-day average

In the next part, we’ll look at the stock movements of the midstream stocks with the highest implied volatilities.

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