Correlation Between Beijing Gas and NewJersey Resources
Can any of the company-specific risk be diversified away by investing in both Beijing Gas and NewJersey Resources 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 Beijing Gas and NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijing Gas Blue and NewJersey Resources, you can compare the effects of market volatilities on Beijing Gas and NewJersey Resources 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 Beijing Gas with a short position of NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Gas and NewJersey Resources.
Diversification Opportunities for Beijing Gas and NewJersey Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beijing and NewJersey is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Gas Blue and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources and Beijing Gas 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 Beijing Gas Blue are associated (or correlated) with NewJersey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewJersey Resources has no effect on the direction of Beijing Gas i.e., Beijing Gas and NewJersey Resources go up and down completely randomly.
Pair Corralation between Beijing Gas and NewJersey Resources
Assuming the 90 days horizon Beijing Gas Blue is expected to under-perform the NewJersey Resources. In addition to that, Beijing Gas is 8.22 times more volatile than NewJersey Resources. It trades about -0.13 of its total potential returns per unit of risk. NewJersey Resources is currently generating about 0.02 per unit of volatility. If you would invest 4,639 in NewJersey Resources on November 8, 2024 and sell it today you would earn a total of 56.00 from holding NewJersey Resources or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Beijing Gas Blue vs. NewJersey Resources
Performance |
| Timeline |
| Beijing Gas Blue |
| NewJersey Resources |
Beijing Gas and NewJersey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Gas and NewJersey Resources
The main advantage of trading using opposite Beijing Gas and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Gas position performs unexpectedly, NewJersey Resources 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 NewJersey Resources will offset losses from the drop in NewJersey Resources' long position.| Beijing Gas vs. ENN Energy Holdings | Beijing Gas vs. EverGen Infrastructure Corp | Beijing Gas vs. OPAL Fuels | Beijing Gas vs. Atmos Energy |
| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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