Correlation Between FLEX LNG and New Fortress
Can any of the company-specific risk be diversified away by investing in both FLEX LNG 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 FLEX LNG and New Fortress into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and New Fortress Energy, you can compare the effects of market volatilities on FLEX LNG 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 FLEX LNG with a short position of New Fortress. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and New Fortress.
Diversification Opportunities for FLEX LNG and New Fortress
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FLEX and New is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG 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 FLEX LNG 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 FLEX LNG 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 FLEX LNG i.e., FLEX LNG and New Fortress go up and down completely randomly.
Pair Corralation between FLEX LNG and New Fortress
Given the investment horizon of 90 days FLEX LNG is expected to generate 0.44 times more return on investment than New Fortress. However, FLEX LNG is 2.28 times less risky than New Fortress. It trades about -0.01 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.07 per unit of risk. If you would invest 3,013 in FLEX LNG on August 23, 2024 and sell it today you would lose (395.00) from holding FLEX LNG or give up 13.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. New Fortress Energy
Performance |
| Timeline |
| FLEX LNG |
| New Fortress Energy |
FLEX LNG and New Fortress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and New Fortress
The main advantage of trading using opposite FLEX LNG and New Fortress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG 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.| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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