Correlation Between Cheniere Energy and BOS Better
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and BOS Better 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 Cheniere Energy and BOS Better into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and BOS Better Online, you can compare the effects of market volatilities on Cheniere Energy and BOS Better 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 Cheniere Energy with a short position of BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and BOS Better.
Diversification Opportunities for Cheniere Energy and BOS Better
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheniere and BOS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online and Cheniere 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 Cheniere Energy Partners are associated (or correlated) with BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and BOS Better go up and down completely randomly.
Pair Corralation between Cheniere Energy and BOS Better
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.78 times more return on investment than BOS Better. However, Cheniere Energy Partners is 1.29 times less risky than BOS Better. It trades about 0.13 of its potential returns per unit of risk. BOS Better Online is currently generating about 0.1 per unit of risk. If you would invest 4,654 in Cheniere Energy Partners on September 3, 2024 and sell it today you would earn a total of 1,059 from holding Cheniere Energy Partners or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. BOS Better Online
Performance |
| Timeline |
| Cheniere Energy Partners |
| BOS Better Online |
Cheniere Energy and BOS Better Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and BOS Better
The main advantage of trading using opposite Cheniere Energy and BOS Better positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, BOS Better 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 BOS Better will offset losses from the drop in BOS Better's long position.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Hess Midstream Partners |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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