Correlation Between Distribuidora and Naturgy BAN
Can any of the company-specific risk be diversified away by investing in both Distribuidora and Naturgy BAN 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 Distribuidora and Naturgy BAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and Naturgy BAN SA, you can compare the effects of market volatilities on Distribuidora and Naturgy BAN 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 Distribuidora with a short position of Naturgy BAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and Naturgy BAN.
Diversification Opportunities for Distribuidora and Naturgy BAN
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Distribuidora and Naturgy is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and Naturgy BAN SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy BAN SA and Distribuidora 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 Distribuidora de Gas are associated (or correlated) with Naturgy BAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy BAN SA has no effect on the direction of Distribuidora i.e., Distribuidora and Naturgy BAN go up and down completely randomly.
Pair Corralation between Distribuidora and Naturgy BAN
Assuming the 90 days trading horizon Distribuidora is expected to generate 1.34 times less return on investment than Naturgy BAN. But when comparing it to its historical volatility, Distribuidora de Gas is 1.32 times less risky than Naturgy BAN. It trades about 0.41 of its potential returns per unit of risk. Naturgy BAN SA is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 169,000 in Naturgy BAN SA on September 13, 2024 and sell it today you would earn a total of 61,500 from holding Naturgy BAN SA or generate 36.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Distribuidora de Gas vs. Naturgy BAN SA
Performance |
| Timeline |
| Distribuidora de Gas |
| Naturgy BAN SA |
Distribuidora and Naturgy BAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and Naturgy BAN
The main advantage of trading using opposite Distribuidora and Naturgy BAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora position performs unexpectedly, Naturgy BAN 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 Naturgy BAN will offset losses from the drop in Naturgy BAN's long position.| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Edesa Holding SA | Distribuidora vs. Longvie SA |
| Naturgy BAN vs. Transportadora de Gas | Naturgy BAN vs. Distribuidora de Gas | Naturgy BAN vs. Edesa Holding SA | Naturgy BAN vs. Longvie SA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |