Correlation Between Fevertree Drinks and Naturgy Energy
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Naturgy Energy 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 Fevertree Drinks and Naturgy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and Naturgy Energy Group, you can compare the effects of market volatilities on Fevertree Drinks and Naturgy Energy 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 Fevertree Drinks with a short position of Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Naturgy Energy.
Diversification Opportunities for Fevertree Drinks and Naturgy Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fevertree and Naturgy is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group and Fevertree Drinks 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 Fevertree Drinks PLC are associated (or correlated) with Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Naturgy Energy go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Naturgy Energy
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to generate 5.96 times more return on investment than Naturgy Energy. However, Fevertree Drinks is 5.96 times more volatile than Naturgy Energy Group. It trades about 0.17 of its potential returns per unit of risk. Naturgy Energy Group is currently generating about -0.1 per unit of risk. If you would invest 795.00 in Fevertree Drinks PLC on November 3, 2024 and sell it today you would earn a total of 145.00 from holding Fevertree Drinks PLC or generate 18.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. Naturgy Energy Group
Performance |
| Timeline |
| Fevertree Drinks PLC |
| Naturgy Energy Group |
Fevertree Drinks and Naturgy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Naturgy Energy
The main advantage of trading using opposite Fevertree Drinks and Naturgy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Naturgy Energy 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 Naturgy Energy will offset losses from the drop in Naturgy Energy's long position.| Fevertree Drinks vs. Eidesvik Offshore ASA | Fevertree Drinks vs. SIEM OFFSHORE NEW | Fevertree Drinks vs. AUST AGRICULTURAL | Fevertree Drinks vs. North American Construction |
| Naturgy Energy vs. CenterPoint Energy | Naturgy Energy vs. Snam SpA | Naturgy Energy vs. ENN Energy Holdings | Naturgy Energy vs. ENN Energy Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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