Correlation Between Egyptian Gulf and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Egyptian Gulf and Natural Gas 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 Egyptian Gulf and Natural Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Gulf Bank and Natural Gas Mining, you can compare the effects of market volatilities on Egyptian Gulf and Natural Gas 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 Egyptian Gulf with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Gulf and Natural Gas.
Diversification Opportunities for Egyptian Gulf and Natural Gas
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Egyptian and Natural is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Gulf Bank and Natural Gas Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Mining and Egyptian Gulf 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 Egyptian Gulf Bank are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Mining has no effect on the direction of Egyptian Gulf i.e., Egyptian Gulf and Natural Gas go up and down completely randomly.
Pair Corralation between Egyptian Gulf and Natural Gas
Assuming the 90 days trading horizon Egyptian Gulf Bank is expected to under-perform the Natural Gas. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Gulf Bank is 1.76 times less risky than Natural Gas. The stock trades about 0.0 of its potential returns per unit of risk. The Natural Gas Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,672 in Natural Gas Mining on October 26, 2024 and sell it today you would earn a total of 1,358 from holding Natural Gas Mining or generate 50.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Gulf Bank vs. Natural Gas Mining
Performance |
| Timeline |
| Egyptian Gulf Bank |
| Natural Gas Mining |
Egyptian Gulf and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Gulf and Natural Gas
The main advantage of trading using opposite Egyptian Gulf and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Gulf position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| Egyptian Gulf vs. Contact Financial Holding | Egyptian Gulf vs. Arab Aluminum | Egyptian Gulf vs. QALA For Financial | Egyptian Gulf vs. Act Financial |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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