Correlation Between Excelerate Energy and New Fortress

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Can any of the company-specific risk be diversified away by investing in both Excelerate 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 Excelerate 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 Excelerate Energy and New Fortress Energy, you can compare the effects of market volatilities on Excelerate 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 Excelerate Energy with a short position of New Fortress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelerate Energy and New Fortress.

Diversification Opportunities for Excelerate Energy and New Fortress

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Excelerate and New is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate 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 Excelerate 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 Excelerate 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 Excelerate Energy i.e., Excelerate Energy and New Fortress go up and down completely randomly.

Pair Corralation between Excelerate Energy and New Fortress

Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 0.62 times more return on investment than New Fortress. However, Excelerate Energy is 1.62 times less risky than New Fortress. It trades about 0.04 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.15 per unit of risk. If you would invest  2,948  in Excelerate Energy on November 9, 2024 and sell it today you would earn a total of  44.00  from holding Excelerate Energy or generate 1.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Excelerate Energy  vs.  New Fortress Energy

 Performance 
       Timeline  
Excelerate Energy 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Excelerate Energy may actually be approaching a critical reversion point that can send shares even higher in March 2025.
New Fortress Energy 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New Fortress Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New Fortress exhibited solid returns over the last few months and may actually be approaching a breakup point.

Excelerate Energy and New Fortress Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Excelerate Energy and New Fortress

The main advantage of trading using opposite Excelerate Energy and New Fortress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelerate 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.
The idea behind Excelerate Energy and New Fortress Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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