Correlation Between Dominion Energy and New Fortress
Can any of the company-specific risk be diversified away by investing in both Dominion Energy and New Fortress 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 Dominion Energy and New Fortress into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and New Fortress Energy, you can compare the effects of market volatilities on Dominion Energy and New Fortress 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 Dominion Energy with a short position of New Fortress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and New Fortress.
Diversification Opportunities for Dominion Energy and New Fortress
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dominion and New is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and New Fortress Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Fortress Energy and Dominion 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 Dominion Energy are associated (or correlated) with New Fortress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Fortress Energy has no effect on the direction of Dominion Energy i.e., Dominion Energy and New Fortress go up and down completely randomly.
Pair Corralation between Dominion Energy and New Fortress
Taking into account the 90-day investment horizon Dominion Energy is expected to generate 0.59 times more return on investment than New Fortress. However, Dominion Energy is 1.71 times less risky than New Fortress. It trades about 0.02 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.39 per unit of risk. If you would invest 5,528 in Dominion Energy on November 18, 2024 and sell it today you would earn a total of 31.00 from holding Dominion Energy or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominion Energy vs. New Fortress Energy
Performance |
| Timeline |
| Dominion Energy |
| New Fortress Energy |
Dominion Energy and New Fortress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and New Fortress
The main advantage of trading using opposite Dominion Energy and New Fortress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy position performs unexpectedly, New Fortress 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 New Fortress will offset losses from the drop in New Fortress' long position.| Dominion Energy vs. Southern Company | Dominion Energy vs. American Electric Power | Dominion Energy vs. Nextera Energy | Dominion Energy vs. Consolidated Edison |
| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |