EnLink Has the Highest Correlation with Crude Oil among MLPs
ENLC’s correlation with crude oil
EnLink Midstream LLC (ENLC), EnLink Midstream Partners’ (ENLK) general partner, has the highest correlation with crude oil among all active MLPs. EnLink Midstream Partners, which owns most of the EnLink franchise, is also among MLPs with the highest correlation with crude oil. ENLC’s one-year correlation with crude oil was 0.52 as of October 6, 2017, while the correlation between ENLK and crude oil was 0.44. ENLK is in eighth place.
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ENLK’s high correlation with crude oil could be attributed to its involvement in the natural gas processing and crude oil and NGL (natural gas liquid) marketing business. ENLC could have a higher correlation with crude oil than ENLK because of its dependence on the limited partnership for distribution income. ENLK’s commodity price exposure might increase in the coming quarters, driven by its natural gas processing capacity expansion. ENLK is bullish on the expansion of processing capacity in the Delaware and STACK (Sooner Trend Anadarko Canadian Kingfisher) regions. For details, read EnLink Midstream Partners Could Gain Upward Momentum.
Approximately 78.6% of analysts rate EnLink Midstream a “hold,” 14.3% rate it a “buy,” and the remaining 7.1% rate it a “sell.” At the same time, 56.3% of analysts rate EnLink Midstream Partners a “hold,” 37.5% rate it a “buy,” and the remaining 6.2% rate it a “sell.” ENLC’s and ENLK’s target prices, both $19.10, imply an 11.0% and 15.5% upside potential based on their current prices, respectively. In the next article, we’ll look into the correlation between DCP Midstream (DCP) and crude oil.