Correlation Between Eastern and One Gas
Can any of the company-specific risk be diversified away by investing in both Eastern and One 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 Eastern and One Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and One Gas, you can compare the effects of market volatilities on Eastern and One 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 Eastern with a short position of One Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and One Gas.
Diversification Opportunities for Eastern and One Gas
Very good diversification
The 3 months correlation between Eastern and One is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas and Eastern 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 Eastern Co are associated (or correlated) with One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of Eastern i.e., Eastern and One Gas go up and down completely randomly.
Pair Corralation between Eastern and One Gas
Considering the 90-day investment horizon Eastern Co is expected to under-perform the One Gas. In addition to that, Eastern is 1.71 times more volatile than One Gas. It trades about -0.02 of its total potential returns per unit of risk. One Gas is currently generating about 0.3 per unit of volatility. If you would invest 6,937 in One Gas on September 4, 2024 and sell it today you would earn a total of 741.00 from holding One Gas or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. One Gas
Performance |
| Timeline |
| Eastern |
| One Gas |
Eastern and One Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and One Gas
The main advantage of trading using opposite Eastern and One Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, One 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 One Gas will offset losses from the drop in One Gas' long position.| Eastern vs. AB SKF | Eastern vs. Aquagold International | Eastern vs. Thrivent High Yield | Eastern vs. Morningstar Unconstrained Allocation |
| One Gas vs. Northwest Natural Gas | One Gas vs. Chesapeake Utilities | One Gas vs. NewJersey Resources | One Gas vs. RGC Resources |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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