Correlation Between APA and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both APA and OPAL Fuels 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 APA and OPAL Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Group and OPAL Fuels, you can compare the effects of market volatilities on APA and OPAL Fuels 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 APA with a short position of OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and OPAL Fuels.
Diversification Opportunities for APA and OPAL Fuels
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between APA and OPAL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding APA Group and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels and APA 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 APA Group are associated (or correlated) with OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of APA i.e., APA and OPAL Fuels go up and down completely randomly.
Pair Corralation between APA and OPAL Fuels
Assuming the 90 days horizon APA Group is expected to generate 2.78 times more return on investment than OPAL Fuels. However, APA is 2.78 times more volatile than OPAL Fuels. It trades about 0.0 of its potential returns per unit of risk. OPAL Fuels is currently generating about -0.19 per unit of risk. If you would invest 450.00 in APA Group on November 8, 2024 and sell it today you would lose (50.00) from holding APA Group or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
APA Group vs. OPAL Fuels
Performance |
| Timeline |
| APA Group |
| OPAL Fuels |
APA and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and OPAL Fuels
The main advantage of trading using opposite APA and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.The idea behind APA Group and OPAL Fuels 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.| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey Resources |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges |