Correlation Between CES Energy and Natural Gas
Can any of the company-specific risk be diversified away by investing in both CES Energy and Natural Gas 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 CES Energy and Natural Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CES Energy Solutions and Natural Gas Services, you can compare the effects of market volatilities on CES Energy and Natural Gas 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 CES Energy with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and Natural Gas.
Diversification Opportunities for CES Energy and Natural Gas
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CES and Natural is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services and CES Energy 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 CES Energy Solutions are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of CES Energy i.e., CES Energy and Natural Gas go up and down completely randomly.
Pair Corralation between CES Energy and Natural Gas
Assuming the 90 days horizon CES Energy is expected to generate 1.31 times less return on investment than Natural Gas. But when comparing it to its historical volatility, CES Energy Solutions is 1.03 times less risky than Natural Gas. It trades about 0.15 of its potential returns per unit of risk. Natural Gas Services is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,922 in Natural Gas Services on September 12, 2024 and sell it today you would earn a total of 707.00 from holding Natural Gas Services or generate 36.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CES Energy Solutions vs. Natural Gas Services
Performance |
| Timeline |
| CES Energy Solutions |
| Natural Gas Services |
CES Energy and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and Natural Gas
The main advantage of trading using opposite CES Energy and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES Energy position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| CES Energy vs. Tamarack Valley Energy | CES Energy vs. Secure Energy Services | CES Energy vs. Caixabank SA ADR | CES Energy vs. High Arctic Energy |
| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |