Correlation Between Enagas SA and NewJersey Resources
Can any of the company-specific risk be diversified away by investing in both Enagas SA and NewJersey Resources 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 Enagas SA and NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enagas SA and NewJersey Resources, you can compare the effects of market volatilities on Enagas SA and NewJersey Resources 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 Enagas SA with a short position of NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enagas SA and NewJersey Resources.
Diversification Opportunities for Enagas SA and NewJersey Resources
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enagas and NewJersey is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Enagas SA and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources and Enagas SA 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 Enagas SA are associated (or correlated) with NewJersey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewJersey Resources has no effect on the direction of Enagas SA i.e., Enagas SA and NewJersey Resources go up and down completely randomly.
Pair Corralation between Enagas SA and NewJersey Resources
Assuming the 90 days horizon Enagas SA is expected to under-perform the NewJersey Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Enagas SA is 1.08 times less risky than NewJersey Resources. The pink sheet trades about -0.36 of its potential returns per unit of risk. The NewJersey Resources is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 4,639 in NewJersey Resources on August 27, 2024 and sell it today you would earn a total of 511.00 from holding NewJersey Resources or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enagas SA vs. NewJersey Resources
Performance |
| Timeline |
| Enagas SA |
| NewJersey Resources |
Enagas SA and NewJersey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enagas SA and NewJersey Resources
The main advantage of trading using opposite Enagas SA and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enagas SA position performs unexpectedly, NewJersey Resources 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 NewJersey Resources will offset losses from the drop in NewJersey Resources' long position.| Enagas SA vs. NewJersey Resources | Enagas SA vs. Atmos Energy | Enagas SA vs. UGI Corporation | Enagas SA vs. Chesapeake Utilities |
| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire Inc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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