Correlation Between Natural Gas and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Egyptian Gulf 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 Natural Gas and Egyptian Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Mining and Egyptian Gulf Bank, you can compare the effects of market volatilities on Natural Gas and Egyptian Gulf 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 Natural Gas with a short position of Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Egyptian Gulf.
Diversification Opportunities for Natural Gas and Egyptian Gulf
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natural and Egyptian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Mining and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank and Natural Gas 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 Natural Gas Mining are associated (or correlated) with Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Natural Gas i.e., Natural Gas and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Natural Gas and Egyptian Gulf
Assuming the 90 days trading horizon Natural Gas is expected to generate 9.34 times less return on investment than Egyptian Gulf. In addition to that, Natural Gas is 1.08 times more volatile than Egyptian Gulf Bank. It trades about 0.01 of its total potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.15 per unit of volatility. If you would invest 27.00 in Egyptian Gulf Bank on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Gas Mining vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Natural Gas Mining |
| Egyptian Gulf Bank |
Natural Gas and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Egyptian Gulf
The main advantage of trading using opposite Natural Gas and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Egyptian Gulf 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 Egyptian Gulf will offset losses from the drop in Egyptian Gulf's long position.| Natural Gas vs. Odin for Investment | Natural Gas vs. Egypt Aluminum | Natural Gas vs. Nile City Investment | Natural Gas vs. Cairo For Investment |
| Egyptian Gulf vs. Orascom Financial Holding | Egyptian Gulf vs. Housing Development Bank | Egyptian Gulf vs. National Bank | Egyptian Gulf vs. Orascom Investment Holding |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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